Finance Bill

The hon. Gentleman is a man of most moderate temperament, and I should not wish to malign him. In the game of chess being played out between Treasury officials and City tax lawyers, the Treasury is agreeing to play blindfolded, and there can be only one winner. What is there to stop a transaction being broken down into segments of less than £100 million to avoid reporting requirements—just wrapping up the transaction differently? What stops a firm declaring any transaction to be in "the ordinary course of trade"—a phrase that, incidentally, has created legal problems in countries where a general anti-avoidance provision is in place? The Liberal Democrat amendments are simple attempts, like new clause 5, to strengthen the Treasury's arm and powers of intervention—to make exemptions less open to abuse and less user-friendly. The principal argument for user-friendly exemption is the old chestnut, beloved of the CBI, about the anti-competitive dangers of slowing up commerce. At first, I took that argument seriously; I thought it a sound, decent argument. It is the argument against section 765 and the long-standing argument for its withdrawal. Indeed, I thought that it was a serious, solid argument, despite the claims made only four years ago by the then Paymaster General in its favour, saying that it saved""a great deal of revenue"––[Official Report, Finance Public Bill Committee, 30 June 2005; c. 319.]" However, I had the good fortune recently to speak to a man who actually administers the provision. He told me that it still protects a great deal of revenue, that clearance procedures in the modern Revenue and Customs are very rapid, and that adequate advice is freely and readily available—in hours not days—provided HMRC has the staff to provide it. Understandably, I asked the Government—the Financial Secretary, actually—how many staff at HMRC administered the provisions of anti-tax-avoidance legislation. The answer that I received reads as follows:""HM Revenue and Customs (HMRC) staff use whatever parts of the tax code are relevant to help people and businesses pay the right amount of tax and, where necessary, to tackle tax avoidance, evasion and fraud."" ""HMRC is unable to provide information regarding the specific number of resources deployed on the separate elements of that work."—[Official Report, 22 June 2009; Vol. 494, c. 670W.]" The Government simply cannot tell us how many people are involved in counteracting tax avoidance. In summary, I am not confident about the Government's approach, the reporting regime, the exemption or the penalties, which border on the pathetic. I am aware of the dilemma that the Government face: business legitimately needs clarity and speed, and the Treasury needs transparency, fairness and accuracy. However, there is an overwhelming case that a general anti-avoidance provision, coupled with revenue efficiency, can cover most of that. Loose reporting, pathetic penalties and a tangle of tax regulations, however, are unlikely to.