Clause 290 - Meaning of ''notifiable arrangements'' and ''notifiable proposal''

Finance Bill – in a Public Bill Committee at 3:15 pm on 22nd June 2004.

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Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury) 3:15 pm, 22nd June 2004

I beg to move amendment No. 554, in

clause 290, page 241, line 20, after 'enable' insert

'or might be expected to enable'.

Photo of Mr John McWilliam Mr John McWilliam Labour, Blaydon

With this it will be convenient to discuss the following:

Amendment No. 367, in

clause 290, page 241, line 22, leave out paragraph (c) and insert—

'(c) have as their main purpose the obtaining of that tax advantage or making that tax advantage available to another person.'.

Government amendment No. 563.

It may also be convenient to take clause stand part along with those amendments, because this is a group of clauses dealing with broadly the same sort of thing. It might be easier for hon. Members if we do it that way, and then they will not get out of order.

Photo of Mr John Burnett Mr John Burnett Shadow Minister, Home Affairs, Shadow Solicitor General, Law Officers (Constitutional Affairs)

On a point of order, Mr. McWilliam. I might have misheard you, but this is an important series of clauses. When we debate clause 290, will you allow us to range far and wide on the disclosure provisions as a stand part debate initially?

Photo of Mr John McWilliam Mr John McWilliam Labour, Blaydon

I thought that was what I said.

Photo of Mr John Burnett Mr John Burnett Shadow Minister, Home Affairs, Shadow Solicitor General, Law Officers (Constitutional Affairs)

I am sorry. Owing to earlier years' service in the Marines, I do not hear too well, so it would help if you would speak up.

Photo of Mr Howard Flight Mr Howard Flight Shadow Chief Secretary To the Treasury, Economic Affairs, Shadow Chief Secretary to the Treasury

This is probably the most controversial part of the Finance Bill. In a sense, clause 290 is the most important issue of focus. [Interruption.] It lays down that the notifiable arrangements to be reported will be prescribed by Treasury regulations. We have now seen the draft regulations—[Interruption.]

Photo of Mr John McWilliam Mr John McWilliam Labour, Blaydon

Order. There seems to be a constant conversation in Committee, quite apart from what the hon. Gentleman is saying. It would be helpful, at least to me, if it could cease so that I can hear what he is saying.

Photo of Mr Howard Flight Mr Howard Flight Shadow Chief Secretary To the Treasury, Economic Affairs, Shadow Chief Secretary to the Treasury

I thank you, Mr. McWilliam. I certainly do not think that hon. Members were endeavouring to shout me down.

Since the regulations were published, there has been a fair amount of criticism and complaints. In particular, five City law firms have written to the Revenue—I will revert to that in due course. At the heart of the issue, as far as we see it, is the fact that the reporting of the tax avoidance schemes being marketed is in essence a no-brainer. People know when they are marketing them, and when such a scheme is being marketed to them. I submit that those schemes represent overwhelmingly the greater part of the nuisance that these clauses are designed to address, and I make the up-front comment that framing the clauses much more widely than that has led to a lack of clarity about what will and will not be required.

To some extent, the regulations have narrowed down what is in the Bill. I understand that some of them will clarify what they will not cover. However, unlike the VAT clauses, which impose obligations primarily on taxpayers, the obligation in these clauses is on promoters. As the clauses deal mainly with marketing schemes, our basic argument is that they and the regulations should be cut down so that they are much more tightly aimed at such schemes. The compliance burden on businesses must be balanced against the benefits. Indeed, even with the amendments that we have tabled, there is a risk that major burdens will be placed on businesses and on the Inland Revenue itself, as only £1.5 million has been provided to finance the staff who will have to deal with the reports.

Before turning to the amendment, on the assumption that it will not be accepted, I would appreciate more guidance on what ''main benefit'' means and how it differs from the main purpose test, which is in amendment No. 367 and in some anti-avoidance legislation. If a structure is economically advantageous and would exist irrespective of tax relief, can the tax advantage still be a main benefit? Is the intention to deter transactions entered into to avoid tax, or alternatively, to identify all transactions that avoid tax, irrespective of the motivation?

In the regulations, the focus is on employment products and financial products. That is broadly welcome and sensible, but the way in which financial products are defined under the equation is open to fairly wide interpretation. Amendment No. 367 suggests that it would be better to define more closely the main identifiers of notifiable arrangements, with the aim of excluding from notification normal commercial transactions that are merely structured in a tax-efficient way. In other words, transactions that simply reflect Lord Clyde's famous dictum about the shovel in the store would not have to be reported. There is a fundamental difference, grey though the territory is, between standard tax planning and clever tax avoidance schemes. Ideally, it would be sensible to switch from main benefit to a main purpose test in order to focus on the real driver of the transaction. After all, that is a theme in other anti-avoidance legislation.

I said earlier that I would return to the 12-page letter sent by five eminent City law firms to the Revenue. It highlights several concerns about the definitions of promoters in the clauses and in draft

guidance. I wish to put on the record a summary of their concerns. First, because the notification date for notifiable purposes is earlier than that for notifiable arrangements, a scheme may have to be disclosed earlier if a client uses a promoter. As a result, the measure may discourage taxpayers from seeking external advice.

There is a potential conflict between client and tax adviser if they take different views on the likelihood of a proposal being a notifiable proposal. If a tax adviser made a protective disclosure when uncertain of whether a proposal was notifiable, it could be detrimental to a client's position in subsequent litigation. Separately, such disclosures could also overwhelm the Revenue, as has occurred with the money laundering rules and regulations.

The definitions of the relevant date for the promoter could be unfair in a situation in which a promoter is not the initiator of a notifiable arrangement and may not know when the arrangement becomes available for implementation. In some circumstances, a tax adviser may assist a client but never become aware that he is involved in a notifiable proposal or when such a proposal becomes available for implementation. There are difficulties about the definition of promoter where non-tax advisers are involved. The definition of notifiable proposal could give rise to the perverse scenario that A and B enter into a transaction where tax benefit accrues to B and A's tax adviser is the promoter, and it is not clear in the context of law or accountancy partnership who is the promoter.

The lawyers also raise the concern that there is a distinct possibility that there will be multiple promoters in the case of one notifiable arrangement. The tests set out in the Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) Regulations 2004 may place undue compliance burdens on promoters who may not be aware of an arrangement meeting the relevant description of financial products or may not have the relevant expertise to determine whether it meets the description. The lawyers have identified other issues relating to the definition of tax advantage in the regulations, which they believe is drawn too widely.

The letter goes in some detail into the formula used in the arrangement regulations. The formula gives rise to a wide range of concerns, which are explained at some length. The letter also criticises the time limit for notification, which we shall come to later. After pointing out some minor drafting errors, the letter concludes by looking at the transitional provisions for schemes entered into prior to the commencement date. As I understand it, the Government amendments address most of those concerns.

We and the lawyers are concerned that in a number of places the provisions have to be explained or clarified in the Revenue's guidance notes. While that is helpful on the surface, it is not right that compliance with an important regime, which includes fines, can depend on guidance, which will start to have the tenor of tertiary legislation. Surely the regulations should be sufficient on their own.

Photo of Mr John Burnett Mr John Burnett Shadow Minister, Home Affairs, Shadow Solicitor General, Law Officers (Constitutional Affairs)

It is surely not acceptable to be taxed by Inland Revenue fiat. The hon. Gentleman and I have discussed these matters in the past. Guidance notes are not the law. It is as simple as that. We are here to pass the law. We must pass clear laws, and it must be apparent what those laws are. If the Revenue has an interpretation, that is a matter for it. In the final eventuality, it is for the courts to decide on the basis of the laws that we pass in this House.

Photo of Mr Howard Flight Mr Howard Flight Shadow Chief Secretary To the Treasury, Economic Affairs, Shadow Chief Secretary to the Treasury

I thank my hon. Friend for his robust and sharp summary of the point that I was making. I agree with him wholly.

I have been almost overwhelmed with comment and advice from outside parties, as I am sure has the Minister. While the clauses seem to have been set out rationally, the key issues seem to be who has to disclose, how they disclose, when they should disclose and what they should disclose. Those key points appear in various clauses: ''who'' is in clauses 291 and 298; ''how'' is partly in this clause, but a little strays over into clause 292; ''when'' appears in clauses 292 and 293; and ''what'' is again in this clause and in clause 291. Those are the key issues to be addressed.

We shall come to other issues of concern. The starting point is vague, whether it is five days or longer; there is a potential problem for barristers where the Bar Council rules that they cannot comply; and, as I touched on earlier, the net effect could be that people do not take professional tax advice, which is probably undesirable for both the Revenue and clients.

I am particularly concerned that the reporting requirements should not throw sand in the commercial mechanics of takeovers. The objection of everybody—including the Government—to the general anti-avoidance regulations regime that had the same effect in Canada was that if there had to be clearance for every commercial transaction, it slowed down commerce dramatically.

In a typical takeover situation, the deal is worked out initially in terms of commercial reality and financial engineering, and it then goes to the tax advisers to be structured in the most tax-efficient way, which is totally reasonable. As I understand it—I hope that the Paymaster General can persuade me to the contrary—deal by deal, the advice given in those situations falls within the parameters of the regulations and what has to be reported. Although in practice people may simply go ahead, make the report, wait for their number, feed it to everybody and do goodness knows what else, the less lack of certainty the better for normal commercial health. I would be delighted if she could give us some comfort and tell us that such a situation is not intended to be covered by these clauses and in particular by the regulations.

We saw this practice last year with schedules 21 and 22 on employment-related equity, and previously with the law and regulations pertaining to money laundering. There is a growing trend to draft legislation incredibly widely to catch everything and then to say, ''Oh, we don't really mean that—we'll narrow it down by regulations and guidance to what we're really after, but the law has been drafted that

widely so that we have a big stick to hit people with if we think they're being naughty boys.'' That is a most unacceptable form of law because it leaves innocent people in a position of great uncertainty. The trend should be reversed. If we continue in the same direction, we will end up with many of the legal failings of continental Europe, where law—particularly tax law—becomes political and unclear. It would have been wiser of the Government, for starters, to introduce much simpler legislation that focused specifically on schemes that were being marketed.

I want to make a personal comment. Over the past four or five years, a number of businesses have asked me whether I think that they should use this or that scheme. I have said, ''No—this is clearly silly, clever-cuts stuff and the Revenue will ensure that it is outlawed pretty quickly.'' They have come back two or three years later and said, ''Howard, why did you give us that advice? We find that everyone else has been using these marketed schemes.'' What has the Revenue been doing that everybody, everywhere, knows about many of the marketed schemes? They are not secret. Many businesses have discussed them with the Revenue, so we cannot put the situation down to ignorance. I question why the Revenue has not been more on its toes and tackled many of the schemes. Admittedly, that would have involved the problem of more anti-avoidance legislation, which is a nightmare, as we all know.

There is the matter of efficacy, too. The objective is that the Revenue should at least be much more quickly aware of what is being marketed. That is sensible. However, there will still be the issue of how effectively the Revenue and the Treasury deal with it. Perhaps the Government hope that reporting will be a deterrent, but given the US experience, that is a fairly grey area, particularly if we end up with all manner of things being reported because the requirements are drawn so broadly. That will overwhelm the Revenue and potentially make its task of getting on top of nuisance schemes that should be outlawed pretty quickly by law rather than Revenue diktat all the more difficult. The regulations that the clause unveils are much too wide, as are the related clauses. I look forward to the Minister giving us some comfort that her amendments and the discussions about the regulations will hone the territory into something more manageable and effective.

Photo of Mr John Burnett Mr John Burnett Shadow Minister, Home Affairs, Shadow Solicitor General, Law Officers (Constitutional Affairs) 3:30 pm, 22nd June 2004

I do not want to repeat what the hon. Gentleman said because I entirely agree with him. I return to the point that we discussed in the changes to inheritance tax about criminalising the innocent. We seek clear, unambiguous laws passed by this House, not interpretations that could be made by officials or Ministers.

I would be the first to pay tribute to the Revenue. It has a fair culture that I have admired for many years, and it is a superb service. I hope that any merger between the Revenue and Customs preserves the equity, confidentiality and fairness that the Revenue has for centuries provided to taxpayers in this country. Its lack of prejudice is to a large extent the best in the

world. It treats taxpayers fairly and deals with compliance mercifully and reasonably.

I wish to précis what the hon. Gentleman said. There are three things that I would like to know. Who has to make disclosure; by what legislation is that understood; and why should those persons make disclosure and what should they disclose? The Revenue wants to obey the law. It is not a corrupt institution. There is the odd bad apple, but they do not arise very frequently. The Revenue, as well as taxpayers, must know where it stands, and it is for us in Parliament and no one else to say where it stands.

A fundamental principle of British tax law is that people can organise their tax affairs to mitigate or even obliterate their tax liability. One does not have to volunteer to pay the most tax on any transaction.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

Does the hon. Gentleman accept that the clauses are not about making people pay the most tax even though they are not liable, but ensuring that they pay the tax that the law of the land says they should? If there is any unacceptable behaviour to discuss in the 12 clauses, it is from those who know that they have a tax liability and seek to extinguish it in ways that they choose to keep secret from the Revenue, sometimes with less than candid returns. That is what the clauses are about.

Photo of Mr John Burnett Mr John Burnett Shadow Minister, Home Affairs, Shadow Solicitor General, Law Officers (Constitutional Affairs)

That is an extremely helpful intervention from the Paymaster General. I thought that I might tease her out, and she has been helpful. Many people will concentrate hard on what she has said. As I said, one does not have to volunteer in any transaction to pay the most tax. At its simplest, the high street solicitor will advise—

Dawn Primarolo rose—

Photo of Mr John Burnett Mr John Burnett Shadow Minister, Home Affairs, Shadow Solicitor General, Law Officers (Constitutional Affairs)

Of course I give way. I cannot resist and the Paymaster General knows that. I am just a pawn, or putty, in her hands.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

Whatever. I, and, I am sure, the Committee, would be grateful if the hon. Gentleman elaborated his point by reference to the Bill. Will he refer his point to the clause that deals with the avoidance with regard to gilt strips and explain on what basis that was considered to be acceptable behaviour?

Photo of Mr John Burnett Mr John Burnett Shadow Minister, Home Affairs, Shadow Solicitor General, Law Officers (Constitutional Affairs)

I understand what the Paymaster General is saying. She is nodding her head. There are schemes of an artificiality and an ambiguity that have a history. She and I debated that history when talking about bonuses in gold bullion and so on. Those bonuses were legal and entirely proper until the anti-avoidance legislation was passed. We are in difficult territory. I concede that. However, I reiterate the principle that people can organise their tax affairs so as to mitigate the burden of taxation.

Members of Parliament enjoy many privileges. One of those privileges is a generous London allowance, which means that many Members have two dwellings. It is up to Members to elect—within the two-year time limit—which of those two dwellings is to be considered their principal private residence. They will presumably do so on sound grounds. What is uncertain for many tax advisers and clients, if the latter are aware of it, is

to what extent they can organise their affairs so as to mitigate their tax liability. It is a difficult area.

The Paymaster General talked about gilt stripping. I referred her to discussions that we had years ago about bonuses paid in gold bullion that thus escaped national insurance contributions. If the law on those gold bullion bonuses stated clearly that, if bonuses were paid in that fashion, they were not liable to national insurance contributions, it was entirely lawful for the taxpayer to do that. There might be an element of artificiality—we would all concede that—but that is where we hit the horns of the dilemma. I would be grateful if the Paymaster General referred to the gold bullion scheme and told the Committee her views on such a scheme in the light of the legislation before us.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

I can answer the hon. Gentleman's question immediately. If the legislation had been in operation, the scheme would have been closed before it became operational and the Inland Revenue would have been aware of it and known what to do much faster. Other taxpayers would not have been open to the loss of revenue that they had to make good because of the avoidance scheme.

Photo of Mr John Burnett Mr John Burnett Shadow Minister, Home Affairs, Shadow Solicitor General, Law Officers (Constitutional Affairs)

I have one question to ask the Paymaster General. Why? I am happy to take another intervention. The law of that time was the law. In that bullion scheme, national insurance contributions were to be escaped. If someone is using the law as it stands, why should the Government not comply with the principle that it is open to anyone so to organise their affairs as to mitigate the amount of tax payable?

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West 3:45 pm, 22nd June 2004

Let me point out to the hon. Gentleman, who I think is a lawyer, that the word that he has used at least twice today is well established law. ''Artificiality'' is the word to focus on. He will remember the Ramsay case from about 1988, heard by the Judicial Committee of the other place, which focused on the question of a series of transactions, the hallmark of which was artificiality. Any such schema would not be affected for tax-mitigation purposes. Therefore, in theory, it has been fairly settled law for 15 years or more. However, to set it in concrete in practice is much more difficult, and that is partly what the Bill seeks to do.

Photo of Mr John Burnett Mr John Burnett Shadow Minister, Home Affairs, Shadow Solicitor General, Law Officers (Constitutional Affairs)

I am grateful for that intervention. There was a series of cases. As the hon. Gentleman rightly says, Ramsay was a leading case, but Ramsay is rather more complex, as I am sure he would concede. It was followed by another case—it usually comes to mind smartly, but it is not doing so at the moment, for which I apologise—which effectively said that, if a step were imposed in a tax-avoidance transaction with no commercial reality, it could be struck out. Perhaps someone can remind me of that case.

Photo of Mr Howard Flight Mr Howard Flight Shadow Chief Secretary To the Treasury, Economic Affairs, Shadow Chief Secretary to the Treasury

The Paymaster General merely referred to the reporting of the gold bullion schemes, not to them being illegal. In other words, the issue raised by the hon. Gentleman's question is at the heart of the problem: as long as such schemes are within the law,

they will be within the law until the law changes. As he knows, that is the legal situation.

The issue is what to report and what not to report. It is pretty clear that such marketed schemes are good examples of schemes that should be reported. The problem is what other tax-avoidance structuring needs to be reported that is not a marketed scheme.

Photo of Mr John Burnett Mr John Burnett Shadow Minister, Home Affairs, Shadow Solicitor General, Law Officers (Constitutional Affairs)

The hon. Gentleman's point is the same as that of the hon. Member for Wolverhampton, South-West—artificiality.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

That is not the point. Perhaps I can help the hon. Gentleman. If I have understood what he has said, the argument that he appears to be advancing cannot be the case. His argument is that anything is fair game as long as there is no specific, detailed legislation against it. I think that what I, my hon. Friend the Member for Wolverhampton, South-West and the hon. Member for Arundel and South Downs have been saying is ''No, that cannot be the case'', and disclosure seeks to deal with that.

Photo of Mr John Burnett Mr John Burnett Shadow Minister, Home Affairs, Shadow Solicitor General, Law Officers (Constitutional Affairs)

That is a rather unsubtle interpretation. I am trying to tease out from the Paymaster General exactly what she is trying to hit.

Photo of Mr John Burnett Mr John Burnett Shadow Minister, Home Affairs, Shadow Solicitor General, Law Officers (Constitutional Affairs)

Hang on a minute. The hon. Member for Wolverhampton, South-West says that the Paymaster General is trying to hit tax avoidance. That is not fair, because much tax avoidance—

Photo of Mr John McWilliam Mr John McWilliam Labour, Blaydon

Order. Hon. Members should avoid sedentary interventions, because they are not that helpful, besides which I have been listening carefully and the Paymaster General has not made a speech yet.

Photo of Mr John Burnett Mr John Burnett Shadow Minister, Home Affairs, Shadow Solicitor General, Law Officers (Constitutional Affairs)

Thank you, Mr. McWilliam, but she has made some important interventions and I am delighted to have them.

The point that I am trying to make, which I think the hon. Member for Arundel and South Downs has made too, is that tax avoidance is not to be denied. It is the principle that one can use the tax system to organise one's affairs to mitigate the amount of tax that one has to pay. I have remembered the case. It was Furniss and Dawson.

I have some sympathy with the Paymaster General about the artificial schemes, and certainly the bullion scheme. I am not saying that there should necessarily be a free-for-all on such highly artificial schemes. Promoters are a narrow group of individuals who are promoting and marketing artificial schemes, and there is scope and reason to impose on them where they fall foul, for example, of the Furniss and Dawson rule or the Ramsay rule, where there is an interposition in a transaction of an entirely uncommercial stage purely for tax avoidance. The Inland Revenue should not always be laggards, and I see the necessity for the proposals.

It is difficult for us to pass legislation that deals with such matters, but it is important that, when doing so, we deal with them in Bills and in regulations that are passed through this House. Taxpayers and their advisers must know exactly what is being proposed. We seek clarity this afternoon, both from the

Paymaster General and from the laws of this country. I look forward to hearing from her who has to make the disclosure, why the disclosure has to be made, and what should be disclosed.

Finally, there is the importance of professional privilege, particularly legal professional privilege. Lawyers, barristers and solicitors should know exactly where they stand. If that doctrine is to be eroded, we must have an opportunity to debate that, and to stand up for this country's ordinary taxpayers, so that they themselves, and their advisers, know if and when they are in jeopardy.

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West

Following that interesting speech from the hon. Member for Torridge and West Devon (Mr. Burnett), it seems to me that we are ranging a bit widely here, Mr. McWilliam, and perhaps you will guide me if I go wrong.

Photo of Mr John McWilliam Mr John McWilliam Labour, Blaydon

Order. Wide? We have just had most of the Second Reading speech.

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West

The hon. Gentleman asked three questions. Who has to make disclosure? It says in clause 292 that it is the promoter. Why does it have to be made? So that the Inland Revenue can look at the artificiality, or otherwise, of the scheme. What should be disclosed? That is in clause 290, which tells us about notifiable arrangements and notifiable proposals.

Photo of Mr John Burnett Mr John Burnett Shadow Minister, Home Affairs, Shadow Solicitor General, Law Officers (Constitutional Affairs)

The hon. Gentleman has drawn the Committee's attention to those provisions. Is he entirely clear, having scrutinised them, about the exact extent of disclosure, exactly who is in jeopardy, who should disclose and what should be disclosed?

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West

The hon. Gentleman asks me the questions that he asked in his speech. He asked for certainty, reiterating that matters should be in legislation, and referring to Acts of Parliament and regulations. That is precisely what we have in front of us: a Bill, a draft Act of Parliament, which, in subsection (1)(a), refers to regulations that will be made. There will, therefore, be the legislative certainty he seeks. In clause 290 and the following clauses, it is fairly clear—with respect to him, either he overlooks the point or I misunderstand part 7—that the legislation is about disclosing to the Inland Revenue. It is not per se about the tax bill that may or may not fall upon the taxpayer. It is simply about disclosure.

Photo of Mr John Burnett Mr John Burnett Shadow Minister, Home Affairs, Shadow Solicitor General, Law Officers (Constitutional Affairs)

Does the hon. Gentleman believe that there should be a blanket trawl available to the Inland Revenue of every scheme and every arrangement? Does he believe that, in the normal course of a client's affairs, their affairs should be kept confidential and privileged?

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West

I do not think that there should be a blanket trawl and, from the way I read part 7, nor do the Government. If the Bill goes through both Houses of Parliament, clauses will become sections of an Act, providing certainty that, with the amendments that are likely to be made, they will not provide for a blanket trawl.

Legal professional privilege, or confidentiality of communication as it is known in Scotland, has been a concern of the Law Society of England and Wales, of which I am a member, and it is covered by clause 298.

Photo of Mr John McWilliam Mr John McWilliam Labour, Blaydon

Order. I was just about to make that point. Although I suggest that we take the amendments broadly because they are inter-related, clause 298 is quite specific and narrow. It will not be in order to repeat arguments about clause 290 in any subsequent clauses if those arguments have been adequately advanced.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

I will not venture down the route of discussing legal privilege, which, as my hon. Friend the Member for Wolverhampton, South-West stated, is dealt with in clause 298. It demonstrates that legal privilege is protected. If the hon. Member for Torridge and West Devon wishes to return to the matter when we discuss the clause, he can. Rule 702 of the Bar Council rules, which provides for confidentiality of barristers' papers, is also dealt with, but it is subject to the demands of the law and it would not prevent disclosure. My hon. Friend has drawn that out as well.

We have ranged over a considerable amount of the material covered in all 12 clauses. I will do my best to respond to the amendments and clause 290, although in fairness to hon. Members, if I am able to dispose of their points quickly, I will do.

It is not the intention of the disclosure rules to stop accountants advising their clients on the tax breaks and the concessions that Parliament has introduced. That is entirely acceptable tax planning. Frankly, however, there is a world of difference between that and advisers designing outrageous schemes with the deliberate aim of exploiting tax loopholes that are plainly contrary to what the legislation seeks to achieve. I am grateful to the hon. Member for Arundel and South Downs for touching on that point several times. He seeks clarification on how the Government will try, through the disclosure clauses, to achieve that desirable end.

I find it unbelievably strange that the tax planning industry knows no bounds when it comes to the complexity, understanding and exploitation of the meaning of words, conveying different meaning in order to deliver a tax relief that was not intended, or a tax rebate for tax that was never paid, yet it apparently struggles to come to terms with the Government's proposals on disclosure.

Let us be clear. Disclosure will not of itself affect the tax treatment for a particular transaction. Nor will the fact that a scheme falls within the new rules invite any judgment about the nature of the scheme. That is made clear by Government amendments to clause 290 and to clause 295.

I come to the point that the hon. Member for Arundel and South Downs made about legitimate commercial activity, which was reinforced by the example he gave of people seeking his advice, as he is knowledgeable in that area. He referred politely to dubious schemes. The 100 Group of Finance Directors said in its response to the new rules:

''We have no quarrel with the policy objective to detect and deter the use of 'tax abusive' schemes in order to protect the Exchequer''.

The Exchequer is every citizen in this country. It is the money collected from the citizens of this country in

order to fund the many tasks that they expect the Government of the day to deal with.

The heart of the issue is the question of abusive schemes. The tax-avoidance market thrives on secrecy. When occasionally the Inland Revenue gets to see such schemes—someone may send the information anonymously, or whatever—often the condition at the top is that it must not be disclosed to anyone because the Revenue must not find out. The promoters do not want the Revenue to know about a scheme at least until they have finished marketing it. I put a simple proposition to the Committee. If the promoters were not up to mischief, why would they fear transparency and disclosure? Either they are conducting legitimate business or they are not.

Photo of Richard Bacon Richard Bacon Conservative, South Norfolk 4:00 pm, 22nd June 2004

The right hon. Lady makes an interesting point, which perhaps I may put back to her. She asks what the promoters have to fear from transparency. It may be slightly wide of the clause, but what does the Treasury have to fear from transparency in the disclosure of the financial models in private finance initiative bond transactions? Currently, they are not being disclosed, but they used to be.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

This is a serious discussion about the loss of huge amounts of revenue to the Exchequer, which is in the interests of every citizen in the country. If the hon. Member for South Norfolk (Mr. Bacon) wants to raise wider issues about the Government, he has every opportunity to do so.

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West

Does my hon. Friend agree that in certain circumstances certain taxpayers might be saved money by the provisions? They could find out early on from the Inland Revenue that what they hoped was a nice tax wheeze was never going to work and they could save having to pay a fat fee to the promoter.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

Indeed, that may be the case, but it is rather further down the line. On Second Reading, the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb), who sits on the Conservative Benches, made an excellent speech about corporate responsibility and tax planning. He argued strongly, and I agreed in many respects, that the few tax planners and promoters who design such schemes know exactly what they are doing, how they are going to do it and the consequences for the Exchequer. He made a moral argument, but I am not going to go down that route. The Government are seeking to take the issue forward through disclosure.

Photo of Mr Howard Flight Mr Howard Flight Shadow Chief Secretary To the Treasury, Economic Affairs, Shadow Chief Secretary to the Treasury

Perhaps the Paymaster General is coming to the fundamental point that within the spectrum of what we would call avoidance we broadly all perceive that there are bogus-type schemes that get marketed, and that there is accepted tax planning consultation and structuring with which the Revenue is familiar. The problem is the dividing line between the two. It seems to me that marketing is a key practical dividing line. The whole activity of thinking up clever-cuts schemes and marketing them is what is being sought. However, the clauses, and in particular

clause 290 on the regulations, do not use that as the dividing line, and that has led to concerns about a lack of clarity on reporting and concerns about people not knowing where they stand.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

With respect, I will come to that. However, I will say that some of the schemes are designed for specific use by a client, and they produce hundreds of millions of pounds of savings on the tax that is liable. Therefore, they deny the Exchequer the money to which it should have been entitled.

I agree with the hon. Gentleman that this goes to the heart of why disclosure is the way forward. He has spoken about it before, as I have, in various debates. The dividing line between acceptable tax planning and unacceptable tax avoidance is very difficult to draw with precision. Therefore, the Government are approaching the matter on the basis that the disclosure rules are designed to reflect that. They will operate entirely in a non-judgmental way and they are aimed at those types of transactions where, in the Inland Revenue's experience, there is a risk of unacceptably high avoidance.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

Unacceptably high. I am talking about where the risk is highest for likely avoidance.

Photo of Mr John Burnett Mr John Burnett Shadow Minister, Home Affairs, Shadow Solicitor General, Law Officers (Constitutional Affairs)

I simply do not understand that point—it must be a matter of principle, and it is not a matter of the extent of the taxation.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

The hon. Gentleman cannot have it both ways: he cannot complain that somehow this is a trawl across the entire tax system and yet object to the fact that the Government are targeting it on two specific areas—employment and financial projects—and then through the regulations are putting in a series of filters to get us towards precisely what the offending proposals may or may not be.

The hon. Gentleman has only to examine this Finance Bill, let alone the others with which he has been involved since 1987, to see the huge challenge that is posed by dealing with this matter. I think that I am right in saying that there have been 50 major anti-avoidance measures within Finance Bills since 1997. He just has to examine this Finance Bill to see what the Government are having to do to keep up with this matter. As he rightly said, that is no way to proceed in Government, and instead of closing the door after the horse has bolted we need to take suitable measures. I hope that the existence of disclosure will deter some elements, although I am depressed to hear from my Revenue official that there are those who are already seeking to get round the rules. Unfortunately, that is the current position.

The two Government amendments correct a potential misunderstanding about the way in which the disclosure rules will operate in practice. When the Board of Inland Revenue allocates a reference number to a scheme or arrangement disclosed to it, it is not in any way expressing a judgment on whether the scheme is legally effective in achieving a tax advantage. The reference number is a purely administrative matter. If it stops some tax planners in their tracks, good. It may have a deterrent effect, but it will not represent a judgment.

Clauses 290 and 295 might be taken to imply that the Inland Revenue is making such a judgment. Such uncertainty is not intended. If the clauses are not amended, they will create uncertainty about which schemes need to be disclosed—the very points that hon. Gentlemen are making—and, as the hon. Member for Arundel and South Downs rightly said, that could prejudice any future litigation by the Revenue to challenge the scheme in the courts. It is therefore important to correct any potential misunderstanding by means of Government amendments.

The two amendments resolve any uncertainty about the issue. The first clarifies the definition of a notifiable arrangement as one that might be expected to produce a tax advantage, rather than one that does produce such an advantage. It removes the implication that a qualifying arrangement needs to generate a tax advantage successfully in law.

The second amendment makes it explicit that the number allocated by the Inland Revenue to a scheme or arrangement should not be regarded as a judgment that that scheme or arrangement successfully generates a tax advantage. Taken together, the two amendments resolve uncertainty, and I commend them to the Committee.

The Opposition amendment seeks to replace the main benefit test for notifiable arrangements with a test relying on the purpose of the arrangements. In the context of the rules, which are primarily aimed at scheme promoters, the Government remain firmly of the view that it is preferable to define notifiable arrangements by reference to a main benefit test, which is an objective test that will be easier for promoters to apply, as it measures the likely outcome of the arrangements. A test that depended on the purpose of the arrangements would require, at least in part, knowledge of the intentions of the person who is putting the arrangements in place. It would create difficulty in particular cases, as it might be unclear whether the intention of the promoter, or the intention of the client was the relevant consideration.

The second leg of the amendment would restrict the test to requiring that obtaining a tax benefit was the main purpose, rather than one of the purposes, of the notifiable arrangements. That would make the disclosure rules largely ineffective because disclosure would be required only if the Revenue could prove that the tax benefits outweighed any other benefits from the scheme. It would strike down the purpose of disclosure for transparency. If the hon. Member for Arundel and South Downs seeks to press his amendment, I will ask my hon. Friends to oppose it.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

It might be helpful if the hon. Gentleman bears with me a little, because I wish to address some important issues around regulation, promoters and points that he and the hon. Member for Arundel and South Downs have made.

This group of clauses provides for disclosure of schemes and arrangements that have as a main benefit the obtaining of a tax advantage. The test is narrowed by further conditions that focus on whether the

arrangements are a financial product or an employment product. The conditions are set out in regulations. The clauses define promoters as including anyone who is directly involved in the design and marketing of schemes and arrangements within the criteria for disclosure. The Revenue will allocate a reference number to these schemes and arrangements. Promoters will be required to notify clients of that reference number and taxpayers will have to enter that number on their tax returns.

I turn to the issue of regulations acting as the additional filters when the clause has set the scope. In response to the Finance Bill, the Chartered Institute of Taxation said:

''We have commented in the past on the excessive reliance on statutory instruments for the details of tax law. However, here we can accept that the use of Sis is necessary and appropriate in the circumstances.''

Three sets of draft regulations have been up for consultation since 17 May. The draft Tax Avoidance Schemes (Information) Regulations set out the procedural rules for disclosure. The draft Tax Avoidance Schemes (Promoter and Prescribed Circumstances) Regulations set out certain circumstances in which a person is not to be regarded as a promoter for the purpose of the disclosure rules. The draft Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) Regulations prescribe arrangements that must be notified under the disclosure rules, where the arrangements have as a main benefit the obtaining of a tax advantage. Basically, that addresses the who, wherefore and how that the hon. Members for Arundel and South Downs and for Torridge and West Devon touched on. The closure date for consultation on those regulations is 30 June, so further issues might be submitted in the coming period that the Government will want to take note of. I thought that it would help Committee members if I mentioned that so that they can see what our intentions are when we discuss subsequent clauses.

Extensive consultations on the new disclosure regime have been taking place since the Bill was published, and so far three key issues have emerged, which we propose to address through changes to the legislation. Although the consultation period has not finished yet, I want to say where we have now reached.

The first of the three key issues that concern us is the definition of promoter; the hon. Member for Arundel and South Downs mentioned that. That and the second issue, which is the definition of what has to be disclosed, may be too wide. The third issue is a concern that the 1 August operative date will be impossible to meet.

On the definition of promoter, the Government want to ensure that the rules strike the right balance as to the range of people who are required to report. Clause 291 is drafted very widely to bring those involved in providing tax services within the scope of the regime. It also provides vires to narrow the range of people required to report by prescribing in regulations the circumstances in which a person is not to be treated as a promoter.

Let me respond to the point made by the hon. Member for Arundel and South Downs. When we publish revised regulations, we shall exclude from the definition of promoter anyone not involved in those parts of the scheme that give rise to a tax advantage—for example, someone dealing only with the company law aspects of a scheme—and most people responsible for the organisation or management of the arrangements, unless connected with the designer of the arrangements. These changes will ensure that only those who are at the heart of a scheme or arrangement, and are capable of meeting the obligations, are treated as promoters.

Photo of Harry Cohen Harry Cohen Labour, Leyton and Wanstead 4:15 pm, 22nd June 2004

I support the proposals overall, but has the Paymaster General satisfied herself in her own mind that there is a distinction between a promoter developing these schemes and those who are developing these schemes in-house for a very big corporation? I am thinking of the example of the Murdoch press, which in my opinion does not pay its fair share of tax. Such a corporation will have a whole army of promoters, but they will probably be in-house developers of tax avoidance schemes. Will they be captured by these clauses?

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

I can assure my hon. Friend that the clauses provide for disclosure under those circumstances, and identify, in a subsequent clause that we will come on to discuss, exactly what in-house promoters, as he called them, whether at the company or a connected company, will be required to do.

Photo of Mr Howard Flight Mr Howard Flight Shadow Chief Secretary To the Treasury, Economic Affairs, Shadow Chief Secretary to the Treasury

It may be difficult, but I would be grateful if the Paymaster General could answer the following question for me, as I still do not know the answer. Let us imagine that whoever is now bidding for Marks and Spencer succeeds in winning the bid. Naturally, as they put together the transaction for taking over the business, they would go to their accountants and lawyers and get advice as to how to structure that in the most tax-efficient way. Anyone who runs a self-employed business and is coming up to retirement will naturally go to their accountant, and potentially their lawyer, and ask, ''What is the most efficient way I can sell this business?'' I do not believe either of those activities should fall within what the Government are after, but there seems to be no clarity as to whether they would or would not.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

It would be helpful if I moved on to explain to the hon. Gentleman the definitions of what has to be disclosed, as that will address the pertinent point he is putting to me.

There is a series of filters in the regulations that narrows down the kind of arrangements that have to be disclosed. They come down to the two ultimate tests, focusing on employment products and financial products respectively, as set out in the draft regulations. The Government believe that the employment products test meets its objective and, apart from some minor technical refinements, expect it to remain as it is. The consultation has confirmed that view. However, and I think this addresses the hon. Gentleman's point, we recognise that the financial

products test as drafted is, frankly, proving difficult to apply in practice.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

Difficult to apply in practice, was what I said. When we publish revised regulations, we shall drop the formula requiring promoters to calculate the value of the tax benefit versus the difference between the economic benefit and the cost of the arrangements.

Photo of Mr John Burnett Mr John Burnett Shadow Minister, Home Affairs, Shadow Solicitor General, Law Officers (Constitutional Affairs)

I will deal with the facile interventions made by the hon. Member for Wolverhampton, South-West later. The Paymaster General has kindly dwelt at some length on the points I asked her about, and about which the primary legislation is immensely nebulous, although I shall leave that to one side.

The Paymaster General talked earlier about wanting to catch transactions where the tax benefit outweighed other benefits, or where that was not a relevant consideration. Surely she will agree that other benefits could be commercial, and if those commercial benefits were such that they were of paramount importance, it would be incumbent on individuals in company law to proceed on that basis.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

With regard to the revised regulations, it may help if I tell the hon. Gentleman what the next point is. I am sure that he is not going to dispute with me that the concept of main benefit is widely used in existing tax legislation, so it is hardly unfamiliar to advisers. The second point concerned putting in place new filters that focus on factors identified with the innovative use of sophisticated financial products to gain a tax advantage that could be sold at a premium, as contrasted with the routine use of financial products that an adviser in the relevant tax field might be expected to put forward.

That deals with the point raised by the hon. Member for Arundel and South Downs about not interfering with the proper advice that might be given to a client who was seeking that advice, and including a list of financial products to which disclosure does not apply. ISAs and finance leasing will be on that list. Those changes will ensure that disclosures are required only in respect of financial product-based arrangements that pose the greatest potential risk to the Exchequer. As I said, the closing date for consultation on the regulations is 30 June, so I should not wish to mislead the Committee, or anyone still wishing to make submissions, that the Government will not listen sympathetically to any further points that are made.

The other point that the hon. Gentleman raised concerned the operative date of 1 August. I do not propose to change the planned date for the disclosure regime. However, in recognition of the fact that promoters will have little time to put appropriate systems in place and train staff between the finalisation of the rules and the start date, we shall make the following changes to the commencement rules and regulations.

Where the relevant date for disclosure falls on or after 1 August, the time limit for making the disclosure will be 30 September 2004, or five days, whichever is later. There has been no evidence of arrangements

involving financial products being actively marketed since Budget day. In view of that and the changes that we shall be making to the draft regulations, and to demonstrate how fair the Government will be with regard to the disclosure rules, there will no longer be a requirement to disclose arrangements from 18 March or 23 April 2004, as is currently set out in clause 302. Instead, promoters will be required only to disclose arrangements involving financial products where the relevant date falls on or after today. Promoters will be given until the 31 October 2004 to make the disclosure in respect of the financial product arrangement with the relevant date falling on or between 22 June 2004 and 31 July 2004.

However, there is evidence that arrangements involving employment products have been actively marketed, so I am not proposing any changes to the requirements in clause 302 for those to be disclosed where the relevant date falls on or after 18 March or 23 April 2004, as appropriate. Regulations will allow promoters until 31 October 2004 to make disclosures in respect of employment products where the relevant date falls on or before 31 July 2004. Those changes will therefore give promoters sufficient time to make the transition without compromising the objectives of the new scheme.

I am extremely grateful, Mr. McWilliam, for your tolerance in allowing me to respond on clause 290 to the detailed points made by the hon. Members for Arundel and South Downs and for Torridge and West Devon. I want to indicate the Government's intention on a number of other issues, but I am keen to ensure that the Committee is clear that, in establishing clause 290 and clauses that we have yet to discuss, we will approach the issues in a proportionate, fair and sensible fashion, while still attempting to ensure that we receive disclosure of the abusive schemes that we seek to deter. That will place the Government in a sensible position in which to take decisions on future actions. I commend this clause to the Committee.

Photo of Mr John McWilliam Mr John McWilliam Labour, Blaydon 4:30 pm, 22nd June 2004

It may be for the convenience of the Committee if I give some indication of my intentions for the rest of the evening. There will be at least one Division in the House at 5 o'clock and perhaps two, but in any event I propose to suspend the sitting from 5 until 5.30 to enable hon. Members to have a bit of a break. We shall return at 5.30 and crack on with consideration of the Bill.

Photo of Mr Howard Flight Mr Howard Flight Shadow Chief Secretary To the Treasury, Economic Affairs, Shadow Chief Secretary to the Treasury

I thank the Paymaster General for her valuable description of some important refinements and changes that will be made to the regulations, which will answer a number of issues. There is one issue that I did not mention earlier, but the hon. Member for Torridge and West Devon touched on it and I would like to comment on it in the light of my experience over 30 years of a good relationship with the Inland Revenue and of discussing issues and solving problems in a practical manner. I am a little rusty now, because I have been here for seven years. However, one is aware that, since then, quite a lot of things have crept in from north America and other parts of the world that have led to a more aggressive stance. To some extent, the Government have

contributed to that. I am advised, for example, that many bogus swap deals creating artificial losses were entered into by oil companies, which were annoyed and offended at the extra 10 per cent. tax limit on them, for which they felt there was no consent. Taxation is ultimately about consent; it is not just about Governments with large majorities. I hope that we will return to the constructive relationship with the Revenue that has been a hallmark and a great advantage of this country, rather than the aggressive ''you fight, we fight'' situation that we have been moving towards.

I will not press my amendment to a vote, but there is still a long way to go to sort out what will and will not be reportable. Although we still think that the word ''purpose'' is ultimately better and it follows the US model, there is a question as to the difference between benefit and purpose. However, much progress has been achieved this afternoon.

Photo of Mr John Burnett Mr John Burnett Shadow Minister, Home Affairs, Shadow Solicitor General, Law Officers (Constitutional Affairs)

I, too, am grateful to the Paymaster General. I would just like to leave her with a couple of points to consider. This relates to fairness for the taxpayer. Will the Inland Revenue publish its anonymised rulings in relation to the schemes? Will those rulings be available to taxpayers as a form of guidance? That would be a considerable help. In addition, the Revenue is quite often well aware of schemes, because they have been used for years. You may well have been aware of them yourself, Mr. McWilliam.

A simple example is the pref trick. It has not been able to be used for some years now, but it was in common use in corporate takeovers. It involved changing the class of shares from ordinary shares to preference shares and the use of renounceable letters of allotment. Stamp duty on many corporate takeovers was therefore avoided. It was negligent for a law firm not to use that form of tax avoidance. If the Revenue, or at least the stamp duty office, did not know about it, it was grossly negligent itself because it was used over many years. That is just one small example. Are we going to allow the Revenue arbitrarily to change its mind and to decide that a system that it has acquiesced in for years should be reportable when it is not now reportable?

Photo of Mr Howard Flight Mr Howard Flight Shadow Chief Secretary To the Treasury, Economic Affairs, Shadow Chief Secretary to the Treasury

I thank the hon. Gentleman for raising an important point. The Jones case will be heard before the Inland Revenue Commissioners around 14 June. It is a very bad case of the Revenue wantonly reinterpreting an old provision.

Photo of Mr John McWilliam Mr John McWilliam Labour, Blaydon

Order. That is sub judice.

Photo of Mr John Burnett Mr John Burnett Shadow Minister, Home Affairs, Shadow Solicitor General, Law Officers (Constitutional Affairs)

I will avoid any reference to that case. You quite rightly intervened at that point, Mr. McWilliam. Nevertheless, the hon. Member for Arundel and South Downs has made a powerful point, which he grafted on to the point that I made earlier. We cannot allow the Inland Revenue to chop and change. I want to see a system of anonymised reporting, and if the Revenue makes a ruling, we cannot have it chopping and changing in the future. We want a transparent, fair system.

I return to the points that I made earlier, which are relevant. Who is the promoter, what should they

disclose and why should they disclose it? We want to be certain on those matters and it is incumbent on the legislators—the people promoting this Bill: the Government—to make that abundantly and accurately clear so that all taxpayers know where they stand.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

On whether anonymised schemes will be published, I made it clear to the Committee that the disclosure of a scheme and the allocation of a reference number to it—it is not a clearing or ruling system—conveys no status apart from the fact that the scheme has now been disclosed to the Revenue. In order to achieve what the hon. Member for Arundel and South Downs is suggesting in terms of publication, we would have to move to a full ruling system. Discussions and consultations on that, over a considerable time, have shown business and advisers to be against the introduction of a general anti-avoidance regulation. If he wants to advance that as a suggestion, that is entirely a matter for him, but it is not the purpose of the amendments.

I am grateful to the hon. Members for Arundel and South Downs and for Torridge and West Devon for praising the Revenue. The Revenue is charged with acting on our behalf to be fair to all taxpayers, and it needs to be given the proper tools by Parliament to discharge its duty. That is what these clauses propose.

Finally, the hon. Member for Arundel and South Downs made a point about the motivations of those who, in anger, frustration or political disagreement, are driven to use schemes that they know go against the intention of the law, such that they conceal them. I could not possibly comment on that. My experience as a Treasury Minister since 1997 demonstrates, unfortunately, that the advent of tax planning in an aggressive, consistent and systematic assault on the Exchequer is recent, and growing very fast. It is incumbent on any Government to deal with that, and the Government are doing so to try to level the playing field for fair, honest taxpayers. That is what we are seeking to achieve.

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West

I apologise to the hon. Member for Torridge and West Devon, who called me facile, because I assumed—clearly I was wrong—that he had looked at the draft Tax Avoidance Schemes (Promoters and Prescribed Circumstances) Regulations 2004, the draft Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) Regulations 2004 and the draft Tax Avoidance Schemes (Information) Regulations 2004.

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West

Let me finish. Those draft regulations were circulated to you, Mr. McWilliam, and Committee members under a covering letter written by the Paymaster General dated 13 May, which was six weeks ago.

Photo of Mr John Burnett Mr John Burnett Shadow Minister, Home Affairs, Shadow Solicitor General, Law Officers (Constitutional Affairs)

Those regulations are not entirely clear. The hon. Gentleman is aware of that. That has been the tenor of the Paymaster General's comments in the past half hour.

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West

We are debating the draft regulations. The Paymaster General has already said that certain parts will be changed. However, it is clear that the hon. Gentleman has not gone through them.

Amendment agreed to.

Clause 290, as amended, ordered to stand part of the Bill.