Schedule 20 - Stamp duty: restriction to instruments relating to stock or marketable securities

Finance Bill – in a Public Bill Committee at 4:45 pm on 10th June 2003.

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Photo of Mr Howard Flight Mr Howard Flight Shadow Chief Secretary to the Treasury 4:45 pm, 10th June 2003

I beg to move amendment No. 67, in

schedule 20, page 244, line 4, at end add—

'Clearance procedure

2A(1) The following provisions shall have effect where in pursuance of this Part of this Schedule a person furnishes to the Inland Revenue particulars of things done or to be done by him (either alone or together with others) to seek confirmation of a just and reasonable apportionment of any consideration, that is to say—

(a) if the Inland Revenue are of the opinion that the particulars, or any further information furnished in pursuance of this paragraph, are not sufficient for the purposes of this Part of this Schedule, they shall within 30 days of the receipt thereof notify to that person what further information they require for those purposes, and unless that further information is furnished to the Inland Revenue within 30 days from the notification, or such further time as the Inland Revenue may allow, they shall not be required to proceed further under this section;

(b) subject to subparagraph (1)(a) above, the Inland Revenue shall within 30 days of the receipt of the particulars, or, where that subparagraph has effect, of all further information required, notify that person whether or not they are satisfied that the apportionment proposed is just and reasonable;

and, subject to the following provisions of this paragraph, if the Inland Revenue notify him that they are so satisfied, the apportionment proposed shall be deemed to have been done on a just and reasonable basis.

(2) If the particulars, and any further information given under this paragraph with respect to any transaction or transactions, are not such as to make full and accurate disclosure of all facts and considerations relating thereto which are material to be known to the Inland Revenue, any clearance given by them under this paragraph shall be void.

(3) In no event shall the giving of a clearance under this paragraph with respect to any transaction or transactions prevent this paragraph applying to a person in respect of transactions which include that transaction or all or some of those transactions and also include another transaction or other transactions.'.

Schedule 20 requires taxpayers to recognise a just and reasonable apportionment of consideration into non-stampable amounts when a transfer acquires stampable and non-stampable property. Where two persons acquire stampable property, the joint consideration has to be apportioned on a just and reasonable basis between them. Where the taxpayer gets it wrong, the transfers are stampable as if they are correct, but the correct answer is not clear. The schedule also amounts to legislative rewriting of private contracts. The amendment introduces a clearance procedure designed to give certainty to taxpayers as to where they stand.

Photo of Mr Paul Boateng Mr Paul Boateng Chief Secretary, HM Treasury, The Chief Secretary to the Treasury

The amendment seeks to introduce a formal clearance procedure for agreeing with the Inland Revenue the basis on which consideration is to be apportioned when an instrument or several instruments transfer property of which only parts relate to stock or marketable securities. As part of its normal service, the stamp office will review documents and discuss them on a formal basis, which is normally helpful. Provided that all the facts have been disclosed to the Inland Revenue, that practice gives the parties concerned certainty about the stamp duty payable.

There is also a formal adjudication procedure, which enables the parties to a transaction to obtain a firm opinion as to the duty payable. That also provides a route for appeal should there be disagreement with the Inland Revenue. The clearance procedure proposed would increase complexity by creating a third measure for obtaining help from the stamp office. I cannot accept that the amendment would add to or improve the advice already available. The Inland Revenue seeks to be helpful and to discuss such matters. I do not think that the amendment is necessary, although it is no doubt well meaning.

Photo of Mr Howard Flight Mr Howard Flight Shadow Chief Secretary to the Treasury

I am glad that the Chief Secretary has spoken into the record what amounts to a clearance procedure and acknowledged that it is necessary in such situations. I accept that the formal procedure is not needed, and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Mr Howard Flight Mr Howard Flight Shadow Chief Secretary to the Treasury

I beg to move amendment No. 66, in

schedule 20, page 244, leave out lines 27 to 36.

In the final paragraph of schedule 20, the Treasury has taken further power to amend or repeal primary legislation on stamp duty and the new tax by regulations subject only to negative resolution. The power is too wide, and the Chief Secretary referred inaccurately to the changes because stamp duty is not being confined to stock market or marketable securities. Our amendment would uphold the rights of Parliament.

Photo of Mr Paul Boateng Mr Paul Boateng Chief Secretary, HM Treasury, The Chief Secretary to the Treasury

The amendment seeks to delete the power of the Treasury to make regulations to amend or repeal enactments relating to stamp duty and stamp duty reserve tax, consequent on the abolition of stamp duty, except on instruments relating to stock or marketable securities.

There is a complex interaction between stamp duty and stamp duty reserve tax, and we need to ensure that the present effect of the legislation is preserved for stock and marketable securities. The ability to do that by Treasury regulations means we can ensure that repeals and amendments are put in place when they are needed and that the reduction in the scope of stamp duty is achieved smoothly. The facility to make regulations for that purpose is a sensible measure to have in place, and I urge the Committee to reject the amendment, which would be unhelpful in its effect.

Photo of Mr Howard Flight Mr Howard Flight Shadow Chief Secretary to the Treasury

We remain concerned that the power is too wide, and I repeat that it is not accurate, as stamp is not being confined to stock and marketable securities. In principle, if the Government have not worked out what they want to do and to repeal, they should delay the process. We are uncomfortable with yet more power resting with the Treasury. However, in view of the time, I shall not press the amendment to a vote. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 20 agreed to.