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Standing Committee B
Tuesday 17 June 2003
(Morning)
[Sir Nicholas Winterton in the Chair]
(Except clauses 1, 4, 5, 9, 14, 22, 42, 56, 57, 124, 130 to 135, 138, 139, 148 and 184 and schedules 5, 6, 19 and 25, and any new clauses and schedules tabled by Friday 9th May 2003 relating to excise duty on spirits or R&D tax credits for oil exploration.)
8.55 am
The Chairman: May I welcome hon. Members to the penultimate sitting of the Committee on the Finance Bill 2003? I am convinced that we will remain good humoured and continue to make excellent progress, but I am aware that the Opposition Whip wishes to raise a point of order.
Mr. David Wilshire (Spelthorne): On a point of order, Sir Nicholas. I wish to raise two matters. First, I express my sorrow that no one was willing to join me in the all-night party, which would have been very brief, so that we could all be here on time this morning after the late sitting last night.
My other point is much more substantial. You will notice, Sir Nicholas, that my former opposite number, the hon. Member for Bradford, South (Mr. Sutcliffe), is not in his place this morning. I am not complaining that he is not here. He has been whisked away. If nothing else, Whips look after their own, and it would be very unkind of me not to congratulate him on his new post. The only sorrow in his elevation is that a man of such ability would better have been sent to do a job of work for a decent Government rather than the one to which he has been sent.
The Chairman: I am extremely grateful to the hon. Member for Spelthorne (Mr. Wilshire). It was remiss of me not to congratulate the hon. Member for Bradford, South on his promotion, and we wish him well with his new responsibilities.
The hon. Member for Spelthorne also enables me to say that two or three people whom I bumped into this morning said that last night was like the good old times, but I suspect that views in the Committee on that matter may well be very mixed.
The Paymaster General (Dawn Primarolo): Further to that point of order, Sir Nicholas. May I thank the hon. Member for Spelthorne for summing up the best wishes of the Committee to my hon. Friend the Under-Secretary of State for Trade and Industry, who was the Government Whip? I am sure that the Committee also wishes to congratulate my hon. Friend the Member for Gravesham (Mr. Pond) on his appointment as Under-Secretary of State for Work and Pensions. He is also unable to be with us this morning. We shall all miss him greatly, particularly me, but I am sure that, with your guidance, Sir Nicholas, we can proceed through the last stages of the Bill in the same way as our business has been conducted thus far.
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The Chairman: I am grateful to the Paymaster General for those remarks. I am sure that the Committee joins her in congratulating the hon. Member for Gravesham. I seem to be the only one who has not received promotion. [Hon. Members: ''Shame.''] I have lived with that for many years, and no doubt will continue to do so. Clause 143
PAYE on notional payments: reimbursement period
Question proposed, That the clause stand part of the Bill.
Mr. Stephen O'Brien (Eddisbury): May I, too, add my congratulations to the two hon. Gentlemen on their elevation? I thought that office did not come any higher than Chairman of the Procedure Committee, so I am not sure how your further promotion could be possible, Sir Nicholas. We meet this morning following a decent number of hours in yesterday's parliamentary sitting, and we are bright eyed and bushy tailed.
The stand part debate on clause 143 deals with the change that allows employees a further 60 days in which to reimburse their employers. The clause is deregulatory and more equitable, and thus attracts our support. We are glad that the Government have listened to representations on this matter, particularly from the Chartered Institute of Taxation.
One further caution still resides with the Institute of Chartered Accountants, which welcomes the change but has asked whether the Paymaster General would respond to the consideration that it will not necessarily overcome all the problems arising from what used to be called section 144A of the Income and Corporation and Taxes Act 1988. One solution when repayment is not made within the 90-day period would be to treat the unpaid amount as a loan. Alternatively, an amendment could have been inserted to extend the 90-day period in appropriate circumstances to such a longer period as the Revenue may allow. As the Paymaster General will note, we have not proposed such an amendment and wish to gauge reaction by placing the matter on the record.
The Institute of Chartered Accountants has also suggested for tidying up purposes that the Treasury might want to give consideration to consistency across the provisions of the 1988 Act. The period for reimbursement is 90 days, but the notification period for share options under the enterprise management incentive scheme is 92 days and a three-month period could create some standardisation, either at 90 or 92 days. Naturally, it has requested 92 days.
Dawn Primarolo: I am grateful to the hon. Gentleman for welcoming the clause. His reaction has been very supportive. He asked two questions. The first one concerned whether the formal loan agreement is entered into so that the employee is obliged to repay PAYE to the employer. That will count as making good, so will remove the charge under section 222. Of course, if the loan is interest free, if interest is less than interest at the official rate or if the loan is subsequently waived, the beneficial loans and class 1A of the
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national insurance legislation will apply. That is the clarification that he sought.
Secondly, he asked why the period was not 92 days. From the next tax year, if an employer makes a notional payment to an employee on 5 April, the 90-day period will expire before the employer's 6 July deadline for completing and submitting the taxable benefits form—P11D. That form can include details of amounts not reimbursed. The UK International Chamber of Commerce suggested that the 30-day deadline could be extended to 60 or 90 days, and the Confederation of British Industry also suggested 90 days.
Clause 143 shows that we accept those representations in full, and we believe that they fit well with the other legislation. The hon. Gentleman made a more general point about attitudes to legislation, and I would say that as always we keep such matters under review, and should it transpire that further changes would aid smooth operation, the Government would consider them. At present, the provisions are as far as we have been asked to go, and we believe that that is as far as it is necessary for us to go. I commend the clause to the Committee.
Question put and agreed to.
Clause 143 ordered to stand part of the Bill.
Clause 144
PAYE: regulations and notional payments
Question proposed, That the clause stand part of the Bill.
Mr. O'Brien: These new provisions have been discussed as part of the tax law rewrite. There is no further technical comment to make, but one point has been raised, and the Paymaster General may wish to reflect on it because it requires immediate attention. Six of the seven subsections are not concerned with notional payments, and as the clause is intended to update the vires for PAYE, the words ''and notional payments'' should be excluded from the heading. That might be an aid to clarification.
Mr. Michael Jack (Fylde): I welcome the clause. I hope that it does stand part of the Bill because it represents another important step forward for the tax law rewrite. Just in case we do not reach new clause 8 with sufficient time to discuss all its content, I should like to observe that the rewriting of the PAYE regulations was a derivative of the main tax law rewrite exercise. It became apparent that it was a necessary and proper area to rewrite, as the helpful explanatory note illustrates. There has been a certain amount of assumption in the way in which PAYE and its regulations have operated since it was first devised in 1943. The rewrite helps to move something that has operated to some degree on assumption into clarified and correctly written law.
However, I would say to the Paymaster General that that is an illustration of how the by-products of the tax law rewrite are now beginning to accumulate. She will know that, without fundamental changes to
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the operation of PAYE, recommendations of a policy nature that have arisen from the rewrite exercise are now queueing up, as the regulations once did, for ministerial approval to move them forward into rewritten tax law. Will the Paymaster General, who has been a doughty supporter of the exercise, consider re-examining the issues that are being raised by the consultative and steering committees closely involved in the exercise? They are raising genuine questions on how not only PAYE but other parts of the tax law operate. I commend to her further thought on how the fruits of the labours of the exercise might be deployed more widely to help to improve the operation of the whole of the tax law, just as these rewritten regulations will make their contribution.
Dawn Primarolo: I am grateful to the right hon. Member for Fylde (Mr. Jack), who committed a huge amount of time to the tax law rewrite when he was Financial Secretary in the Conservative Government. I have put on the record before that I am more than happy to follow in his footsteps in ensuring that the tax law rewrite receives support and encouragement from this Government. I undertake to bear in mind the points that he has made on the policy issues, which I will actively consider.
On the title of the clause, I hear what the hon. Member for Eddisbury (Mr. O'Brien) says, but it is really a matter for parliamentary counsel. His remarks are on the record and I am sure that they can be reflected on. As the right hon. Member for Fylde said, the whole purpose of the measure is to follow through the tax law rewrite with a clear and helpful writing of the legislation. Whenever we can achieve that, we will seek to do so. I commend the clause to the Committee.
Question put and agreed to.
Clause 144 ordered to stand part of the Bill.
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