(Except clauses 1,3,7,8,12,20,21,25,67 and 81 to 84, schedules 1, 18, 22 and 23, and new clauses relating to microgeneration) - Clause 27

Part of Finance Bill – in a Public Bill Committee at 9:30 am on 17 May 2007.

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Photo of Edward Balls Edward Balls The Economic Secretary to the Treasury 9:30, 17 May 2007

I would like briefly to reassure my hon. Friend the Member for Wolverhampton, South-West and Opposition Members. Since the pre-Budget report, there has been consultation on the draft guidance, and extended guidance was published on Budget day. Consultation on the guidance is ongoing and, after the Bill is enacted, we will publish final guidance that will reflect the results of the consultation, the views expressed by representative bodies and our debates. We want to provide clarity and reassurance on the record where we can.

I will give two examples to clarify our intentions and to further reassure Opposition Members. A straightforward example of a loss that would not be affected by this measure is a simple arm’s length sale of FTSE 100 shares that have genuinely gone down in value. The fact that someone who realises such a loss might be able to set it off against gains that he or she has made on other investments in the year would not mean that the loss would be disallowed by this measure. Similarly, if a husband transfers to his wife, on a no-profit, no-loss basis, shares that are standing at a loss, it is perfectly acceptable for her to sell those shares and set the loss against a gain that she intends to realise on some other  asset. Those are examples of normal tax planning that would not be captured by the measures.

In the real world of tax policy making and, with respect to the hon. Member for Braintree, in the real world of business, the best way to provide clarity is not always to make legislation more complex or restrictive. Indeed, adding such complexity can undermine the best efforts of both sides to find a sensible way forward. That is why consultation on guidance, rather than restriction and legislation, can often be a better was to proceed in tax policy making. I urge him to reflect on that point a little further.