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Finance Bill

My Lords, the basis for the debate is the economic situation. There have been a number of voices pointing out that although there have been 51   quarters of growth, some of those were before the Chancellor took office. But of course there have been many spurts of growth in the past which many of us will have seen. What they have all had in common is that they petered out in the misery of unsustainable inflation. This is what makes this one unique for our times. That in particular was the success of the Chancellor of the Exchequer. I do not believe that the golden rule needs to be set in such firm concrete but I am in favour of what might be called a ““silver rule”” which allows for sensible deviations in the light of changed circumstances. Always, from time to time, there must be room to allow for this. It used to be said that the high rates of taxation were the encouragement to tax avoidance schemes, but even now that the tax rates are so much lower, the tax avoidance industry has continued to grow and to become ever more sophisticated and well paid as tax avoidance and tax planning devices have developed. There is, as we all know, the perennial problem that anti-avoidance provisions impose the burden on industry, and particularly the burden on smaller businesses. Large companies which can employ and pay for specialist advisers, lawyers and accountants can deal more easily with complex provisions. Offering their expertise has been a very profitable business. The difficult task for the Revenue and Customs is to discourage artificial devices which do not put too high a burden on business and do not impede genuine arrangements. This is a never-ending burden and success can never be assured. Of course, the Revenue and Customs cannot hand out advice. Accountants and lawyers are there for that purpose. Although one might have wished for a situation in which pre-clearance could be secured, this, not surprisingly, would lead to a testing of artificial schemes to find out which could get through and which loophole might be uncovered. One aspect which must be a cause of some disquiet is the matter of retroaction where what may have been undertaken quite legally becomes what the taxpayer may never have anticipated. I understand the use of a press release which indicates what may be coming so as to inform the taxpayer, but if there is any retroaction to a period before that, as was claimed during the debate in another place, it is a matter that we must look at with some apprehension. There is something that needs to be examined here. I, like many others, have been concerned about the five-day reporting time limit in providing ““bespoke schemes””. We dealt with this last year and heard of the difficulty and resource cost of meeting the requirements. We heard that ““an awful lot”” could happen in a 30-day limit which could lead to a significant loss of tax. We came to the conclusion that more time was needed to assess the experience of the disclosure rules. I expect that we may need to look at this again next year.