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Finance Bill

I draw the attention of the House to my entry in the Register of Members’ Interests. I congratulate my hon. Friend the Member for Braintree (Mr. Newmark) on a fine maiden speech. I do not agree with what the hon. Member for Wirral, West (Stephen Hesford) said. I thought that my hon. Friend set out with admirable clarity his motivation as a politician, which, in my view, is exactly what should be contained in a maiden speech. I congratulate my hon. Friend on his expression of his motivation and vision, as well as his description of his constituency, as I congratulate the hon. Members for North Ayrshire and Arran (Ms Clark), for Newport, East (Jessica Morden) and for Bristol, East (Ms McCarthy) on expressing to the House their alternative political vision that motivated them and brought them here as well. We have heard four good maiden speeches and I confidently expect that we will hear one or two more before the debate has concluded. It has been said that this is the second half of a Finance Bill of which we have already debated the first half. As others have made it clear that they do not claim any great expertise in the detail of the Bill, I will not put myself ahead of that and claim an expertise that others, wisely, have disavowed. It is not appropriate in a Second Reading debate to try to go through all the detail of the various tax avoidance points that are more properly debated in Committee. I want to draw out two principles that are important for consideration at Second Reading and which should inform the development of tax policy in this and future Bills. The first principle is one to which I referred in a brief intervention on my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond). I hold absolutely no brief for those who market tax avoidance schemes and, like my hon. Friend, I make it crystal clear that I support well-thought-through, clear and well-defined anti-tax avoidance measures. There is no dispute between the two Front Benches—and, indeed, between Conservative Back Benchers and the Treasury Bench—on the need to ensure that the Revenue is protected. When people bring forward artificial avoidance measures, Ministers should be supported when they take steps to protect the Revenue. As a former Financial Secretary to the Treasury, I can say that there is a kind of camaraderie between us and it is important that we have some group therapy to ensure that this important principle is defended. I make no apology for that. When we introduce anti-tax avoidance measures, we should observe some important principles. The first is that if we propose measures that are based on additional discretion for the tax authorities—the measures in this Bill concerned with combating tax arbitrage are a clear case in point, where there is an enhancement of the discretion granted to the tax authorities under clauses 24 and 26—we should do so only in clearly defined circumstances, mindful always of the need to protect the principle of taxpayer certainty. That is why I made the, I think, correct linkage that if we are to enhance discretion for the tax authorities, hand in hand with that should go a greater acceptance than has been our tradition in this country of binding tax clearances granted by the Revenue to the taxpayer when the taxpayer seeks the opinion of the Revenue before making certain dispositions in their affairs. I am well aware of the resistance within the Revenue to that principle. Revenue and Customs, as we must now call it, says, quite rightly, that it is not in the business of giving advice to taxpayers—and that if a taxpayer wants advice, he should go to his accountants. Free advice from the Revenue is not part of its businesses. That is perfectly true, but if a specific proposal is taken to the Revenue in an area of tax policy where the authority has an acknowledged discretion, it is entirely right that the taxpayer should be able to get a ruling in advance of implementing that proposal on how the Revenue will exercise its discretion. I regard that as part of the deregulation agenda. It is worth considering the alternatives. One is that the taxpayer constantly has to weigh a range of different possible outcomes and the only winners will be the tax advisers who go to the nth degree to tease out all the possible options. That cost and waste of time and effort within a business could be eliminated simply by the Revenue telling the taxpayer in advance how the law will be enforced in a given set of circumstances that the taxpayer is planning to create. I do not disagree with the principle contained in these clauses on combating tax arbitrage, and I absolutely do not want us to make tax arbitrage easier. However, if we are to introduce greater discretion as a way of combating tax arbitrage, it is reasonable to ask that there be greater certainty available to the taxpayer through the principle of greater availability of binding clearances given by the Revenue.