Question proposed, That the clause stand part of the Bill.

It is me again, Mr Bone.

It is still a pleasure to serve under your chairmanship.

It is, Mr Bone. Once again, we continue with the theme of tax avoidance, a subject that is close to the hearts of all Committee members. Some are strongly in favour of closing down tax avoidance loopholes, which is what the measure does.

In my understanding, by making it clear that selling an option to buy a property is not sub-selling, the measure has closed a loophole that allows buyers to claim they are exempt from stamp duty because they come under rules designed to avoid stamp duty being payable twice. The clause amends the sub-sale relief rules for stamp duty land tax purposes by setting out that the grant or assignment of an option cannot satisfy the requirements of the SDLT sub-sale rules.

The measure has effect from 21 March 2012, and is aimed at blocking a specific SDLT avoidance scheme considered by most people to be ineffective anyway, because it did not work in the intended way. The scheme, as I understand it, involved an individual purchaser of a property granting a non-connected company an option to acquire the property at market value. The new measure provides that the grant or assignment of an option cannot be a transfer of rights for the purposes of the sub-sale rules, and it only affects individuals.

I believe that the Minister will explain in more detail the clause’s technicalities. Therefore, I will save the Committee from my explanation, and I will allow him to do so.

He is paid to do that.

Order. Was the hon. Gentleman intervening?

Nigel Mills indicated dissent.

I have some questions for the Minister, based on my interpretation of how the clause will work and what the effects may be. The Budget document gives little detail on how much the measure is expected to raise, which may be because the effect is negligible, but I would be grateful if he explained why those figures are not available. Has the practice of sub-selling already been eradicated by the measure’s announcement? Will the Minister provide those figures to the Committee now or subsequently?

At the time of the Budget, it was announced that a more general consultation would take place on sub-selling, and I would be grateful if the Minister provided more details about that. Does he think that there may be a case for restricting the practice more widely in general, and is that something that we should give further consideration to?

Clause 210 amends the stamp duty land tax rules on a transfer of rights or sub-sale, and the change puts beyond doubt that a particular SDLT avoidance scheme does not work. It will be a pleasure to  run through some technical elements of the clause, but before I do so, I will say a word or two about the background.

The SDLT rules contain provisions for a transfer of rights or sub-sale, which is where someone enters into a contract to purchase land but then, before completing the purchase, agrees either to transfer their rights under the contract to a third party or to sell the land on to a third party. The provisions result in SDLT being charged only to the ultimate purchaser; the transaction involving the original purchaser is disregarded. That single charge reflects the economic reality of the transactions, as the intermediate purchaser never takes possession of the land.

Such transfer-of-rights rules frequently feature in attempted SDLT avoidance schemes. A new scheme that became popular in the months leading up to the Budget involved combining the transfer-of-rights rules with the use of an option. HMRC, based on legal advice, is firmly of the view that the scheme has never worked in the way its promoters claim. The scheme was widely marketed and used, however, so clause 210 has been introduced to make it absolutely clear that the scheme does not work.

The hon. Member for Newcastle upon Tyne North asked how much tax has been avoided through the scheme and how much additional tax the change will bring in to the Exchequer. Because HMRC is firmly of the view that the scheme has never worked, no tax has been successfully avoided. None the less, the clause puts the matter beyond doubt. Were HMRC to be wrong, which I do not believe it is, tens of millions of pounds could be at risk. That is why there is no expected Exchequer impact. Any revenue raised through the measure would have been raised through the courts in any event.

Clause 210 inserts a provision into the transfer-of-rights rules to make it clear that the use of an option—the avoidance scheme’s key feature—does not bring transactions within the rules. A consultation on reforming the sub-sale rules will be launched this summer. There is a possibility of introducing legislation in Finance Bill 2013, if necessary, subject to the outcome of that consultation.

Furthermore, as announced at the Budget, the Government will take action to close down future SDLT avoidance schemes, with effect from 21 March 2012, where appropriate. The measure was not published in advance of the Budget due to the risk of forestalling. A limited, confidential consultation was conducted with external interested parties.

The clause supports the Government’s objectives to create a fairer tax system and to tackle SDLT avoidance, so I hope it will stand part of the Bill.

Question put and agreed to.

Clause 210 accordingly ordered to stand part of the Bill.