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Mr. Timms: These are technical provisions. Their purpose, in common with similar measures on other indirect taxes, is to provide for special treatment for groups of companies to protect their revenue and facilitate the administration of the tax.
As the hon. Member for West Dorset (Mr. Letwin) suspected, the clause is based on the arrangements for VAT, but it is not exactly the same because under VAT provisions Customs and Excise can insist on grouping as an anti-avoidance measure. That is not needed in the case of the aggregates levy. This is an entirely voluntary and facilitative arrangement. The clause says that two or more bodies corporate are eligible to be treated as members of the same group for the purposes of the Bill. The fact that the arrangements are not the same as those for VAT may limit the force of the hon. Gentleman's questions.
When we were discussing clause 33, I rightly repeated that the bulk of the provisions are drawn from the arrangements for the landfill tax, which were drawn from those for VAT. I ought to make it absolutely clear that clause 33 itself is based on the arrangements for air passenger duty, which was also introduced by the previous Government.
The hon. Gentleman asked about the timing of commercial exploitation. It is determined by whichever activity is the earliest of those listed in clause 19(1)(a) to (d). Clause 19(7)(a) makes it clear that, once commercial exploitation has taken place, it cannot take place again with the same aggregate.
Mr. Letwin: The Financial Secretary is very helpful. He said that we discover in clause 19(7) the deep truth that it is the timing of the first activity that applies. I see nothing in that subsection that serves the purpose, so to give him time to consider the matter, I shall read it out:
Last Thursday morning, in a rather unpleasantly spent hour, I went back and looked through clause 19(4), (5) and (6) for an answer to that question. For a brief, glorious moment, I thought that I might have found the answer in subsection (6), which says:
"except to the extent that it is not separately identifiable at the time when the agreement is entered into . . . and . . . to that extent, at the time when it is appropriated to the agreement."
I am bound to say that I cannot see anything in clause 19(4) or (5) that resolves the problem. Clearly, there is nothing in clause 19(1), and the Minister has already told us about clause 19(3), so we are left with clause 19(2), but that tells us exclusively about sites. I am at a loss.
Mr. Letwin: I am grateful to the Financial Secretary. I may have misunderstood. I understand that clause 17(2)(c) has an effect that relates to the point about not subjecting something to double taxation under the levy. I shall explain shortly why I do not think that it solves the problem arising in respect of clause 19(1)(a), (b) and (c)--conflicts of time in relation to clause 35--although I may be mistaken about that.
I do not see how clause 17(2)(c), which appears to be a general prohibition on double taxing--and is admirable as such--handles the problem of the conflict of times that arises from a problem identifying, not the moment at which the thing was subjected to a charge, but the moment at which it became eligible to be subjected to a charge, which is a different matter altogether. I may be wrong about this and I shall be delighted if the Minister can assure me that the principles of statutory construction in some way determine that clause 17(2)(c) answers the question of which of the times set out in clause 19(1)(a), (b) and (c) is relevant for the purpose of grouping or ungrouping.
Mr. Letwin: I am grateful to the Financial Secretary for saying that. Under Pepper v. Hart, his comments may help the courts by providing some clue of what he is trying to achieve. I cannot see how on earth the wording achieves the effect that he describes, however. I say that not as a lawyer, but as an ordinary human being who is trying to be a legislator. However, he has clearly stated his intention, so I hope that that may guide the courts and provide a perfectly sensible resolution of the issue.
Let us assume that that is the intention--we must hope that it is also the effect--and consider what will happen if the degrouping to which the clause relates does not lead to avoidance of the tax. I think that the Financial Secretary said that the first of paragraphs (a), (b), (c) and (d) to clause 19(1) would apply before the degrouping. A degrouped company may have removed some relevant substance--in the technical terms of the Bill, it will be an aggregate--from the site, but it will have been covered by 19(1)(a) before the degrouping. Even if the company only later becomes subject to the agreement to supply--in layman's terms, the sale will therefore occur later--and the proceeds go to the degrouped organisation, will not the liability nevertheless arise in relation to the group and not the degrouped entity?
I cannot believe that that is what the Financial Secretary intends. I think that I understand the purpose of clause 19(1)(a), which is, incidentally, jolly odd. The provision is intended to try to allow Customs and Excise to exercise the maximum leverage. Indeed, that is the spirit of the aggregates levy. One does not have to prove that the material has been sold or that it has ever been used or commercially exploited in any terms that the Financial Secretary or I would ordinarily use as ordinary human beings. One has to prove only that the stuff was taken off the site and did not appear at another registered site. That is easy to prove; it is about the most objective fact that one can get at. I think that clause 19(1)(a) was drafted to make it as easy as possible for Customs and Excise to ensure that it gets the levy.
That intention gives rise to the oddities that I described in relation to Mr. Jones and his dimension stone cutting, but it also produces oddities in relation to grouping. The construction of the provisions shows that somebody has said, "How can I make dead sure that Customs and Excise can grab the items in question and tax them?" I do not think that that person has asked to a sufficient extent whether it is fair to add such provisions to the mix of criteria for eligibility for the tax. Nor has it been asked whether it would be reasonable to apply the test of clause 19(1)(a) in all the circumstances that may arise.
This is very complicated terrain, and I do not think that either the Financial Secretary or I have reached the bottom of the matter. Notwithstanding his brave remarks and his splendid Pepper v. Hart explanation of his intentions regarding 17(2)(c), I think that we have probably identified a lacuna in terms of the interaction of clause 35 and clause 19(1). My fear is that there are dozens of other lacunae and that my feeble intellect has not revealed them