Life Assurance Business: I Minus E Basic

Part of Clause 64 – in the House of Commons at 10:17 pm on 8th July 1992.

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Photo of Mrs Judith Chaplin Mrs Judith Chaplin , Newbury 10:17 pm, 8th July 1992

This is a good Bill, and I especially welcome it because of its measures to help businesses. Many businesses are in difficulties and many of the measures, together with those already passed as part of the Budget, will give substantial help, especially to small businesses.

Small businesses have already gained by the freeze in the uniform business rate introduced earlier, whereby no business rate can increase by more than inflation. Many of the businesses in my constituency have been faced with large increases because of the revaluation, so they will welcome the freeze, as will firms throughout the country. That revaluation was based on what may turn out to be a peak year for property values, so the reduction is fair and may relate more closely to the average rate over the five years than to that peak rate.

The Bill also helps small businesses through the changes in the VAT registration threshold, through the changes in the timing of payments and through the reductions in penalties, all of which are important for cash flows. I welcome them all.

The most important measure in the Bill for businesses was the increase to 100 per cent. in the relief on business assets for the purposes of inheritance tax. Too often in this country tax arrangements are designed to deal with a few exceptional cases and no regard is paid to how they affect the vast majority of taxpayers or their effect on the economy. Inheritance tax on business assets was just such a tax. Small companies were often destroyed or irreparably damaged because they did not have the liquid funds to pay the tax following the unexpected death of one of their major owners. I welcome the fact that that will stop, to the great benefit of small companies, which grow to form larger companies.

I have already expressed my concern that the change could lead people to hold on to assets to avoid capital gains tax on the increase in their assets in the long term. It has been suggested that, therefore, changes in inheritance tax should not be made. I urge Ministers to consider capital gains tax—a complex and distorting tax that does tremendous damage to the economy—and I hope that in future that will be high on their list of priorities.

Anything that reduces tax complexity is to be welcomed, as it allows the Inland Revenue and Customs and Excise to deal more effectively with those who, I am told, are now to be called "customers". That is a strange word to use because people have little choice in receiving this service.

A better service for everyone is, however, to be welcomed. I was rather concerned, therefore, to read a report that the Inland Revenue decision to contract out some of its secretarial and support work was being criticised because it was said that it would lower the standards of confidentiality in taxpayers' affairs. I have been a temporary civil servant and rather resent the implication that temporary staff are less aware of confidentiality than permanent staff. I very much hope that Ministers will agree that contracting out will not make taxpayers' affairs less confidential. It will lead to an improvement in the service, which we should all welcome.