Clause 292 - Duties of promoter

Part of Finance Bill – in a Public Bill Committee at 5:30 pm on 22 June 2004.

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Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury) 5:30, 22 June 2004

I understand that amendment No. 4 addresses the situation where a number of people are promoters of a particular scheme by requiring the promoter who notifies the Revenue to copy that notification to all other promoters. The purpose is to enable those other promoters to be satisfied that their duty to disclose details of those arrangements has been discharged by the notification.

The amendment does not achieve that purpose, as it applies only to the disclosure of the notifiable arrangement. The Government expect the majority of disclosures to be made in respect of notifiable proposals, which are likely to involve more than one promoter. Therefore, the amendment would not ensure that other promoters knew when the disclosure requirement in respect of the notifiable proposal had been complied with. It would simply impose another compliance burden on some promoters in certain circumstances.

The Government recognise that there are concerns about the way in which the disclosure rules apply where there are multiple promoters for one scheme, and I have outlined some of the steps that will be taken to address those concerns. I shall not try your patience, Mr. McWilliam, by going over the steps again, but they will be included in the revised regulations, to which I referred in the debate on clause 290. The changes will ensure that only those at the heart of the scheme or arrangement are treated as the promoters. I hope that that deals with the points raised by the hon. Member for Arundel and South Downs. I am happy to offer, even before he asks me, to write to him to reiterate the points that I made on clause 290 and to say why that would be the case, instead of repeating it now.

Taxpayers who use the notifiable schemes are required by clause 297 as part of their normal tax return to provide the Revenue with the scheme number, and they must also disclose when they expect the tax advantage relating from the notifiable arrangements to arise. Amendment No. 6 would remove the latter obligation, but by doing so it would lead to unnecessary inquiries into the taxpayers' tax returns. Again, I can see the hon. Gentleman's motivation, but the amendment could increase inquiries, and we should avoid that.

Clause 297 also requires taxpayers to put the number on their tax return every year until any tax advantage arising from the scheme has been exhausted. The aim is to enable the Revenue to see in which year or years there is tax at risk. The Revenue will want to consider making inquiries into taxpayers'

tax returns for these years, in accordance with the normal risk assessments.

The amendment would deny the Revenue that information—I hope that I will be forgiven for again stretching beyond the clause by referring to such powers. That would cause the Revenue to commence inquiries in some cases when no tax was at risk. That would not only be a waste of Revenue time but create additional and unnecessary compliance burdens for the taxpayer for all the reasons that we have previously discussed with regard to these clauses.

The Government are of the view that those who use the schemes at which the rules are aimed will have no difficulty in knowing the time when the tax advantage arises, either because the promoter will tell them, or because they will have designed the scheme themselves.

I turn to the Government amendments grouped here, apart from Government amendment No. 559. Those amendments deal with the power to prescribe in regulations the form and manner in which the information about notifiable schemes is provided to the Revenue. They address two points. First, an inconsistency in the language has raised questions as to whether it means different things in different places. For example, clauses 292, 293 and 294 refer to information ''in the prescribed manner'', but clause 296 refers to ''the prescribed form'' alone. Meanwhile, clause 297 refers to

''the prescribed form and manner'',

and to

''the prescribed time or times''.

We concede that that could lead to uncertainty. Therefore, the amendments tidy things up by using standard wording.

Secondly, as it is currently drafted, the legislation requires Revenue forms on which disclosure is to be made to be prescribed in regulations. It would be inappropriate for Parliament to introduce a new statutory instrument each time the Revenue wishes to make a minor change to the form. Accordingly, these amendments remove the power of the Board of Inland Revenue to prescribe the form and manner of disclosures in regulations and replace it with a power to specify the form and manner through the Revenue's normal administrative processes.

Parliamentary draftsmen have inserted a new clause, rather than an amendment to the existing clause. I am advised that it would be inappropriate to include it in any existing clauses. I would be happy to share the reasons why with the Committee but, for time's sake, I think we are all prepared to accept the wisdom of parliamentary counsel on this issue.

It is important to recognise that these amendments together with the new clause do not give the Board any new power. Any change in the content of the form affecting the information to be disclosed will continue to require new regulations.

Government amendment No. 559 makes a drafting change to ensure that there is no inconsistency in language between clauses 292 and 295. The duties of a promoter are described in clause 292. As currently drafted, it refers to ''proposed arrangements'', which is

a term that is not defined and does not appear elsewhere in the clauses. During consultation, the Revenue received representations that the use of the term creates confusion and the amendment therefore removes that reference and replaces it with

''notifiable arrangements implementing the notifiable proposal''.

That makes the language consistent with that in clause 295(1), which refers to ''notifable arrangements'' and to ''notifiable proposal''. Both of those terms are defined in clause 290.

As a result of those concluding remarks, I hope that the hon. Member for Arundel and South Downs will accept that his proposed amendments do not achieve the effect that he desires and that at present no convincing argument has been advanced as to why five days should not remain the period in the legislation. I entirely accept that some have expressed a preference for a longer period, but that is not justified. I, therefore, ask him to consider his position on that and I commend the Government amendments to the Committee.