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Finance (No. 2) Bill

I want to make four brief points about the proposal to abolish the HCI, which is perhaps symptomatic of the Government’s approach to many forms of taxation. First, I want to echo the point made forcefully by my hon. Friend the Member for Mid-Worcestershire (Peter Luff), in what I thought was an excellent speech, about the uncertainty created by constant tinkering with taxation regimes. If incentives are introduced, expanded five years later and abolished two years after that, there will always be the difficulty of businesses not being confident that they are working in a stable environment. Such a situation can impact on research and development, for example; indeed, it has had a considerable impact on productivity. This Government, and particularly this Chancellor, have a tendency to meddle and to tinker, and this is an example. My next two points relate to the taxation of employees and employers in respect of home computers—an issue raised by my hon. Friend the Member for Rayleigh (Mr. Francois)—which are treated as a benefit in kind. One consequence of abolishing the HCI is that the question again arises of how home computers are treated. They will not be considered as a benefit in kind where their personal use is not significant, and guidance will be provided on this issue. However, businesses will obviously have to police such usage carefully. They will have to issue guidance themselves and monitor employees to ensure that computers are not used for personal purposes. However, most work computers are to some extent used for personal purposes. I suspect that most people occasionally use computers at work for personal matters and for sending personal e-mails—that is what happens in the real world—and the same applies to the use of home computers. Of course, people are supposed to use computers to complete their tax returns, but that, too, is personal use. So the clause will impose a significant bureaucratic burden on business, which is often another consequence of Government policies. As I said, the Government are going to introduce guidance, and I suspect that there will be a generous and fairly broad definition of what constitutes insignificant use. I am slightly worried, however, at the prospect of the law saying one thing and the guidance saying another—it is saying that people need not worry. My fear is that, instead of having a tightly defined law that people should obey, we will have a loosely defined law that people will obey only sometimes, depending on the guidance. That would not be an ideal arrangement.