Finance Bill

I should like to deal first with the substance of amendment No. 37. I welcome the opportunity to look again at the anti-avoidance provisions in clause 70, which the amendment seeks to change, as the hon. Member for Wolverhampton, South-West (Rob Marris) pointed out. I will address the points made by the hon. Member for Falmouth and Camborne (Julia Goldsworthy) in due course. I am concerned about the amendment because it would remove subsection (11) of new section 75C, which contains one of the few safeguards in the new anti-avoidance regime and as such is an important provision. It is not without its problems, but it is better to keep it in than take it out, as there will be cases where it is important for the Treasury to ensure that new section 75A is disapplied in the way provided for by new section 75C(11). That is because, as I pointed out in Committee, new section 75A is very wide-ranging, as well as controversial. Subsection (11) will provide a bit of a safety valve if the fears that I expressed in Committee materialise in the operation of the section. The drafting of new section 75A and the anti-avoidance provisions in clause 70 have been described by the Chartered Institute of Taxation as ““fundamentally deficient”” and so wide as to render the provision ““almost unworkable””. Similar concerns have been expressed by the Law Society, the Institute of Indirect Taxation and the CIOT’s stamp taxes practitioners group. I am advised that the impact of the provisions is so wide-ranging that checks will probably have to be carried out in virtually all property transactions. That will cause serious conveyancing headaches and give home buyers yet another problem to worry about. The key problem is that new section 75A could catch wholly innocent transactions simply because they involve a series of steps. It requires only that ““one person (V)”” disposes of property and ““another person (P)”” acquires it, that a number of transactions have taken place ““in connection with”” the disposal and acquisition, and that the amount of stamp duty land tax payable in respect of those transactions is less than that due on a notional direct transaction between V and P. Where the conditions apply, SDLT is charged on the notional transfer between V and P. The problem is that the wording of proposed new subsection 75A(1) is so broad that even transactions linked only through conveyancing succession could trigger the operation of the proposed new section 75A and its anti-avoidance provisions. The concern is even greater when one realises that the transactions could take place years apart yet still trigger the operation of the proposed new section, as there is no temporal limit on the operation of the anti-avoidance provisions. For example, if V sells a property to A for £300,000, and A sells it a year later to P for £250,000, proposed new section 75A could apply, thus making P liable for SDLT on £300,000 even though he had no involvement in the earlier transaction. I am told that virtually all sub-sales, in which the sale on to P happens straight away, would be caught. Getting hold of the information about earlier transactions that is needed to check whether there is any danger of triggering proposed new section 75A could add significant delays and costs to home buyers and other property purchasers. HMRC appears to think that all problems can be solved by producing guidance, and it has responded to concerns essentially by producing a white list of transactions, which it believes will not be caught by the proposed new section. However, guidance is not a sufficient substitute for properly drafted legislation. The Bill could affect every high street solicitor and conveyancer in the country, and many of them simply will not have the expertise or resources to keep track of HMRC guidance. Relying on guidance is difficult enough in specialist matters, such as group relief and real estate investment trusts, when a relatively small, well defined body of practitioners is affected, but it gives rise to far greater problems in the context that we are considering. There is an even more important problem, which has recurred throughout our debates on the Bill. As Lord Upjohn once famously commented:"““A taxpayer should be taxed by law not untaxed by concession.””" It is not acceptable for the Government to adopt excessively wide anti-avoidance legislation, which catches a range of innocent transactions, and then seek to give HMRC discretion about the taxpayers to whom to apply it. That contravenes not only the principles set out by the House of Lords in the Wilkinson case that a tax-collecting authority cannot ignore legislation and cannot have significant discretion in tax collection, but the constitutional principle that Parliament, not the Executive, has the right to determine taxation in this country. Proposed new subsection 75C(11), which amendment 37 would delete, enables the white list of cleared transactions to be given legal force via secondary legislation. In a sense, proposed new subsection (11) is an admission that proposed new section 75A is excessively wide. I hope that it will be useful in giving statutory force to the white list in future. However, enabling exemptions for specific sorts of transaction—and even for specific taxpayers—is an unsatisfactory method of solving the problems of an excessively wide provision. I believe that the Chief Secretary acknowledged in Committee that specific taxpayers could be exempt. That is a strange way to draft one’s tax measures. It would be better to draft a more rational and targeted anti-avoidance clause. However, deleting proposed new subsection (11) would not be helpful. Let me deal with the issues that the hon. Member for Falmouth and Camborne raised. I listened with interest to the points that she made about the methods used to avoid paying stamp duty. If she presented detailed, costed and fully researched proposals, my colleagues and I would be happy to consider the case for change. However, I advise against rushing to judgment on the matter. The deputy leadership election in the Labour party and the row about private equity has pushed non-domiciliary tax rules up the political agenda, but we do not want the tax law equivalent of the Dangerous Dogs Act 1991. We need more empirical evidence and an opportunity for thoughtful, objective and considered reflection based on the facts.