Clause 34
Finance Bill
11:15 am
John Pugh (Southport, Liberal Democrat)
This is a very important part of the Bill, as the Minister has underlined; it is very technical but also very important. I want to congratulate him on having introduced this package of measures. It is a crucial package, as it is an attempt to show how a modern taxation system can cope with the global nature of modern commerce.
I want to start by being wholly positive, because I am afraid that I will have to be just a little bit critical later on. Schedule 14 immediately follows and I will make a few general remarks about it. It is definitional and loophole-closing; it is based on a study of real-time transactions, and it definitely has an eye on preventing further abuses of similar ilk.
The effectiveness of this type of legislation depends on the post-hoc scrutiny, the retrospective examination by people within the Treasury who must have adequate skills and abilities to do so. I am a little encouraged, not only by what the Minister has said but by the endeavours of HMRC to recruit appropriate people to police the type of activity that we are discussing on a more regular basis.
In one way, we are looking at a game of chess. On the companies’ side there are very clever people trying to make the best of the exemptions that are available and on the Government’s side there are people trying to close every conceivable loophole. Life has been made enormously more difficult for those people who want to avoid tax by the Government’s imposition of an obligation on businesses that insists that they must declare any tax schemes well in advance. However, the real test of the Bill is whether or not adequate ground rules are laid down to prevent further abuse and further misuse of tax exemptions. We will have to judge whether the Bill has passed that test when we look at the next clauses.