I confirm that the Opposition support the clause in principle for similar reasons that applied when it had its genesis under the previous Labour Government. I have no general problems with it. However, it is fair that I outline to the Committee the concerns expressed to me by the Chartered Institute of Taxation about several matters relating to the clause and schedule 12 so that the Minister will have an opportunity to consider and respond to them accordingly.
The Chartered Institute of Taxation states that it is unclear why proposed new paragraph 34C(2) of schedule 10 to the Finance Act 2003 excludes paragraph 6, which covers the responsibility of partners, and paragraph 8, which includes representative partners under schedule 15 to the Finance Act 2003, and introduces a new concept of relevant persons as claimants for partnerships. Relevant persons are defined under proposed new paragraph 34C(5) as
“(a) any person who was a partner in the partnership at an effective date of the transaction, and…(b) the personal representative of such a person.”
That differs from the definition under paragraph 6 of schedule 15 to the 2003 Act, which defines responsible partners in respect of anything required to be done under part 2 of that Act as
“(a) the persons who are partners at the effective date of the transaction, and…(b) any person who becomes a member of the partnership after the effective date of the transaction.”
The Chartered Institute of Taxation’s worry about that misty new definition is that the meaning of “relevant person” mirrors the definition of “relevant partner”, but it is unclear why there is a departure from the provisions of part 2 of the 2003 Act. The institute believes that that will add complexity to the administration of stamp duty land tax.
I should welcome the Minister’s view on that because the institute has ultimately to work with the legislation and advise people on stamp duty. It believes that there is a difficulty with the definition of “relevant person”, and that there are differences in the Bill between the schedule and the Finance Act 2003. I should be grateful if the Minister would comment on that and I hope he can clarify the measure so that those who read our proceedings and interpret them will understand the intention of the schedule and clause.
The Chartered Institute of Taxation has also commented about proposed new paragraph 34C(3)(a), which states that a claim
“may be made by a relevant person who has been nominated”— and it has highlighted the word “may”. However, sub-paragraph (3)(b) states that a claim
“may not be made by any other person.”
The provision in question is therefore mandatory, and the institute believes that the drafting should reflect that, with the substitution of “shall” for “may”.
We have not tabled an amendment to that effect because I did not feel strongly enough to do so. However, it is important to get clarity from the Minister about the concerns that have been raised by the Chartered Institute of Taxation over the interpretation of the new paragraph. Does he think that it is sufficiently clear to enable the institute’s members to deal with the relevant matters effectively as part of their general duties?
As I have said, the Opposition support the changes to stamp duty land tax and petroleum revenue tax under the clause. However, I should be grateful for the Minister’s response to my comments about the representations that I have received.
Clause 28 introduces schedule 12, which amends the existing relief for mistakes in stamp duty land tax returns, and error or mistake relief for petroleum revenue tax. That is part of the modernisation of error or mistake relief provisions, which introduces a single route to recover overpaid tax. It extends the scope of the current relief and excludes common law claims in respect of overpaid tax.
By providing a final opportunity for taxpayers to reclaim overpayments subject to a single time limit—four years, as with other claims—the measure simplifies the process for reclaiming overpayments. It reduces the administrative burden for taxpayers and HMRC, and provides greater certainty regarding public finances. The changes will take effect from 1 April 2011, allowing further time for claims to be made under the current regime.
HMRC invited responses to the draft legislation in January and February, and when the draft Finance Bill was published in July. We have received comments from the Chartered Institute of Taxation—the right hon. Member for Delyn referred to those and raised a couple of points about them. First, on to the concept of relevant persons as opposed to responsible partners, in the matter of deciding who can make a claim, responsible partners include the current members of a partnership and anyone who was a partner at the date of the transaction. Responsible partners are responsible for making a tax return and for other administrative matters. However, it is the partners at the date of the transaction alone who are jointly and severally liable for the tax that is due.
Overpayment relief allows those who have overpaid an amount of tax in respect of a land transaction to reclaim that sum. Relevant persons are those who were liable to pay the tax or their personal representatives. Therefore it is those persons who must decide who among them should make the claim, which explains the introduction of the concept of relevant persons in this context.
The right hon. Gentleman also raised proposed new paragraph 34C(3), which states that a claim
“may be made by a relevant person” rather than that it shall be made. It is worth pointing out that it is not mandatory for anyone to make a claim. Someone who thinks that they have overpaid stamp duty land tax must decide whether they want to claim overpayment relief, which is why the measure states that the claim “may be made”, not that it shall be made.
If stamp duty land tax has been paid in respect of a partnership land transaction, all the partners involved, or their personal representatives, must agree who is to make a claim, and the provision ensures that there is agreement between the partners before a claim is made. I hope that that provides some clarity about the thinking behind the provisions to the right hon. Gentleman and those who read our debates with interest, and that I have dealt with the concerns raised by the Chartered Institute of Taxation.