Clause 125 - Climate change levy: invoices

Finance Bill – in a Public Bill Committee at 10:00 am on 20th June 2002.

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Question proposed, That the clause stand part of the Bill.

Photo of Chris Grayling Chris Grayling Shadow Minister (Health)

The clause is obviously welcome because it will protect some of the businesses affected by the climate change levy. Will the Economic Secretary consider the fact that the climate change levy is reaching businesses that arguably it

should not? I can give him one specific example of a butcher shop in Ewell village in my constituency which is subject to the levy. Although I understand the Government's motivations for the levy, a local butcher shop should not be caught in its net. Will he consider that over the coming weeks and months?

Photo of John Healey John Healey The Economic Secretary to the Treasury 10:15 pm, 20th June 2002

First, I shall directly respond to the hon. Member for Epsom and Ewell (Chris Grayling). I invite him to write to me with more precise details about the small butcher shop in his constituency to allow me to consider his case that such businesses should not be subject to the levy—that is his judgment call. I shall give the instance full consideration when I have more detail.

The clause introduces a civil penalty for the issuing of invoices that incorrectly charge levy, either by charging it where no levy is chargeable on the supply, or by overcharging. The provision is being introduced because such problems have arisen. The measure will take effect for invoices issued on or after the date of Royal Assent.

In recent months, we have become aware that some suppliers of goods are including a charge on their invoices which is purported to be the levy, but which is not accounted for to customers. That has happened in respect of supplies that are not taxable for levy purposes, either because they are not taxable commodities or because they have been relieved of the levy. It is not the Government's intention with the clause to prevent manufacturers recouping legitimate costs through their pricing structure, so long as customers are not deceived in that process. The inaccurate description by businesses, which are not energy suppliers, of charges as a climate change levy can bring both the tax and the Government policy that underpins it into disrepute. There is no good reason for businesses to pass on levy costs in that fashion; it would be rare for businesses to identify other costs in such a way.

The Government take a similarly dim view of the practice where bogus levy charges are raised by energy suppliers relieved of the levy, such as combined heat and power stations. We cannot stand by while the climate change levy reliefs are undermined in that way and certain suppliers make ill-gained profit at the expense of the tax.

To help prevent customers from being misled and to prevent levy reliefs from being undermined, the clause provides for the imposition of a penalty equivalent to the amount purporting to be the levy, which is subject to a minimum of £50. Similar provision exists for other taxes, such as VAT and landfill tax, so I suggest to the Committee that the new measure is necessary and consistent. For completeness, the penalty regime will apply to registered persons charging amounts by way of a levy on non-taxable supplies or overcharging on taxable supplies. I hope that the Committee will support the clause.

Question put and agreed to.

Clause 125 ordered to stand part of the Bill.