Orders of the Day — Finance Bill

Part of the debate – in the House of Commons at 8:40 pm on 7 June 2005.

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Photo of John Healey John Healey The Financial Secretary to the Treasury 8:40, 7 June 2005

The hon. Gentleman will have to raise that in the consultation process. The Bill, and my responsibility in relation to clause 67, deals narrowly with the tax consequences of the proposed reorganisation.

My hon. Friend Stephen Hesford paid tribute to the wide set of policies that are the responsibility of the Chancellor. He described the Treasury as no longer being the dead hand of the Government. It put me in mind of the quote by Harold Wilson, when in contrast he said that the Treasury is full of very clever chaps who are expert at saying no. My hon. Friend was right to say that the principle of fairness underpins the Bill. It does so because we are dealing with those who evade tax and, by doing so, we help to ensure that they do not steal an advantage over their competitors and impose additional tax burdens on those who pay the tax that is due.

Corporate anti-avoidance measures in the Bill are targeted against avoidance. This means that they should have no impact on genuine commercial activity that does not have a UK tax advantage motive. I stress that concern because the hon. Member for Runnymede and Weybridge raised it. The Government are committed to maintaining a modern and competitive tax system, but for that to be effective, everyone must pay a fair share of taxes and the taxes that are legally due.

My hon. Friend the Member for Wirral, West asked who the beneficiaries of e-conveyancing will be. First, the taxpayer will be a beneficiary, because the process is simplified immeasurably. The solicitor carrying out the e-conveyancing will be aware of all the requirements and will discover automatically whether there are any errors, so the second beneficiary will be Her Majesty's Revenue and Customs, because of the efficiency savings resulting from that type of electronic communication and dealing.

Mr. Dorrell is a former Financial Secretary to the Treasury. I accept that his interest, like mine, is to ensure well-targeted action to counter avoidance, although I am less sure about the group therapy that he seemed to propose for current and ex-Treasury Ministers. He raised important principled concerns about the introduction of what he described as additional discretion for the tax authorities, especially in relation to the arbitrage clauses, 24 to 31. He also described the need for binding tax clearances for the taxpayer.

It might assist the more detailed scrutiny in Committee if I say that the anti-avoidance provisions relating to arbitrage apply only when all the conditions set out in the legislation are met and when HMRC issues a notice. That does not introduce discretion: the conditions of the legislation have to be met and the notice procedure ensures that the legislation is targeted. HMRC has issued guidance and examples of how the legislation will apply in practice. If companies are still unclear about how the provisions apply, they may approach HMRC for clearance, and if clearance is given, HMRC will be bound by it.