National Insurance Contributions Bill

The hon. Gentleman shouts out ““the Magna Carta””, but I am not entirely sure that national insurance was even thought of when that document was drawn up. Amendment No. 6 would, as explained in paragraph 20 of the explanatory notes, remove the limitation whereby the backdating applies to 2 December 2004. Amendment No. 16 brings out one of the key issues relating to retrospection. It is designed to put back into the Bill a particular date from which retrospection can start—11 October 2005. My hon. Friend the Member for Christchurch and other hon. Members have already referred to the surprise of those who follow these matters closely outside this place about the Bill’s relation to the Paymaster General’s statement of 2 December 2004. We had a brief exchange on that matter earlier. In tax representation document 53/05, the Institute of Chartered Accountants said:"““We do not think that anyone reading the Paymaster General’s 2 December 2004 Statement could have expected the content of this Bill.””" In view of that surprise, it may be reasonable to move the date forward to 11 October 2004. In the same paragraph of the representation, the Institute of Chartered Accountants expresses, albeit somewhat less eloquently, the sentiments of my hon. Friend the Member for Braintree (Mr. Newmark) in speaking about Adam Smith. It cites passages from the European case ““Stichting Goed Wonen””. Paragraph 32 states:"““The principles of the protection of legitimate expectation and legal certainty form a part of the Community legal order. They must accordingly be observed . . . by Member States””." And paragraph 33 states:"““Although in general the principle of legal certainty precludes a Community measure from taking effect from a point in time before its publication, it may exceptionally be otherwise where the purpose to be achieved so demands and where the legitimate expectations of those concerned are duly respected””." I suspect that the Institute of Chartered Accountants was surprised on reading paragraph 33 and felt that its legitimate expectations had not been respected. The principles of paragraph 32, it probably thought, should apply—that people should have legitimate expectations and be able to rely on legal certainty. People have asked how that differs from the Rees rules that were set out in the Finance Act 1978, to which my hon. Friend the Member for Christchurch referred. It reminds me of further comments from the accountancy profession. I do not want to go into all the Rees rules again, but I would draw attention to the first of the four:"““First, the warning must be precise in form. A mere suggestion that there are vague schemes of tax avoidance that must be countered should not suffice””." It is the generalised nature of the Paymaster General’s statement of 2 December 2004, which leads people to ask whether the first Rees rule principle has been met. The Paymaster General was explicit in saying earlier that it had been met, but others feel that it has not. That poses the question of how people should have reacted to that statement. Is it perhaps more appropriate to start the period of retrospection from 11 October 2005, when the Bill was published, and to thereby present clearly to advisers, professionals and others interested in tax matters the nature of the Government’s concerns? That is the issue that we have been debating through this group of amendments and it is important to the principle of retrospection. People are looking for clarity and certainty, which the Paymaster General’s statement of December 2004 perhaps did not possess in the eyes of some. I would welcome her comments on that and on other aspects of retrospection. Through amendment No. 18, my right hon. Friend the Member for East Yorkshire (Mr. Knight) seeks to amend just one line in clause 1, but leaves untouched other payments that are themselves linked to national insurance contributions. If his amendment is accepted, another one should be tabled and accepted to bring all contributions and payments into line with each other, instead of singling out statutory payments. Given that there is another group of amendments that we want to discuss later, I will conclude my remarks and look to the Paymaster General to be much clearer about the issue of retrospection and how it fits in with the Rees rules set out in the Finance Act 1978.