|
Column Number: 291
Standing Committee B
Tuesday 3 June 2003
(Morning)
[Mr. Roger Gale in the Chair]
(Except Clauses 1, 4, 5, 9, 14, 22, 42, 56, 57, 124, 130 to 135, 138, 139, 148 and 184 and Schedules 5, 6, 19 and 25, and any new Clauses and Schedules tabled by Friday 9th May 2003 relating to excise duty on spirits or R&D tax credits for oil exploration.)
10.30 am
The Chairman: Good morning, ladies and gentlemen. Welcome back from the break. I trust you are all refreshed.
I have one housekeeping notice. While I am in the Chair, hon. Members may, if they wish to do so for their comfort, remove their jackets. I cannot speak for Sir Nicholas Winterton or Mr. McWilliam on that point. They will have to exercise their own judgment on your behalf.
Mr. Gerry Sutcliffe (Bradford, South): On a point of order, Mr. Gale.
Good morning, and welcome to the Committee. There may be a problem regarding Thursday's planned afternoon sitting. I have notified my opposite number, the hon. Member for Spelthorne (Mr. Wilshire), that we may need to seek a change in the programme, which will mean that the Programming Sub-Committee will need to sit. I hope that that does not cause great inconvenience to the Committee. The proposed change is caused by a clash of Government business on Thursday. We shall endeavour to enable the smooth running of the Committee and due process.
Mr. David Wilshire (Spelthorne): Further to that point of order, Mr. Gale. I am grateful to my opposite number, the hon. Member for Bradford, South (Mr. Sutcliffe), for speaking to me a few minutes ago. As I said to him, I should be grateful if you would give me a while to talk to my hon. Friends, who have only just discovered what the situation is. We shall co-operate and come back to the Committee as soon as we can with a Programming Sub-Committee resolution.
The Chairman: I am grateful to both hon. Gentlemen for that information, which I am sure will be of value to the Committee. Should the Committee choose not to sit on Thursday afternoon, the Programming Sub-Committee will have to meet to vary the programme motion. I understand that talks are talking place to see whether it is possible to rearrange business to accommodate other matters and facilitate Members' presence. Clause 43
Land transactions
Mr. Mark Prisk (Hertford and Stortford): I beg to move amendment No. 4, in
clause 43, page 30, line 7, leave out from 'provision' to end.
Column Number: 292
Welcome to the Chair, Mr. Gale, after our pleasant break, during which some of us felt like GCSE students. I suspect that the Chief Secretary and I shared that delight in making sure that we were intimate with every aspect of the Bill. I welcome the Chief Secretary to his place, and I am sad to hear that there may be a clash of business on Thursday Naturally, if the Economic Secretary wanted to get into the saddle then, we would be more than happy to play ball.
Before I refer to the amendment, I draw the Committee's attention to my entry in the Register of Members Interests. Hon. Members who have not recently referred to it may not know that I am a non-practising chartered surveyor, although it would probably be more accurate to say that I am an out-of-practice chartered surveyor. That means that I am a member of the Royal Institution of Chartered Surveyors, the leading property professional body, to which, among many other august bodies, I shall refer. It is important that the Committee is aware of that interest, which I put on the record for its benefit.
Clause 43 introduces one of the most fundamental changes that the new stamp duty land tax represents—the taxation of land transactions. The clause thereby replaces a 200 or 300-year-old stamp duty, which is not a tax on land transactions, but a charge on documents. I hope to consider the clause in its entirety later in a clause stand part debate, and I shall for now restrict my remarks to amendment No. 4.
The amendment would delete from subsection (2) the words ''by operation of law'' and is intended to probe the reasoning and intent behind the clause. At present the subsection reads:
''Except as otherwise provided, this Part applies however the acquisition is effected, whether by act of the parties, by order of a court or other authority, by or under any statutory provision or by operation of law.''
Subsection (2) is therefore remarkably wide in its scope. Unfortunately, that is typical of this whole part of the Bill, which deals with the stamp duty land tax, in that it involves over-reliance on sweeping powers and scope and overuse of vague language. The problem with that rather crude approach is threefold. First, the lack of clarity creates needless uncertainty for taxpayers. Secondly, the danger of unintended consequences is substantially increased. Thirdly—this is surely a concern from the Government's point of view—such an approach actually undermines measures to restrict tax avoidance.
Amendment No. 4 would remove the phrase ''by operation of law''. Many legal and other professional experts fear that the clause will adversely affect people whom the Government do not intend to hurt. Let us take as an example two people who are not married—perhaps a sister and brother—living together in, and jointly owning, a house. It appears that when one dies, the survivor would be liable to the new tax. That is not the case under the existing stamp duty, but it could be the case under the Bill.
Will the Chief Secretary make it clear who would and who would not be liable in such circumstances, and will he identify which transactions that are not chargeable under existing arrangements for stamp
Column Number: 293
duty will be liable to this tax? Will he also say how much additional revenue these specific transactions—not overall transactions—would generate in a full year, excluding, obviously, anti-avoidance measures?
This is a simple, probing amendment. Its purpose is to help us to examine the subsection with care. I hope that the Chief Secretary is able to provide the clarity that is lacking and which potential taxpayers will seek. If he can do that, I would be prepared to consider withdrawing the amendment, but, naturally, we shall want to hear what he has to say and the conclusions of the debate.
The Chairman: Before we proceed, may I say that the debate has already gone slightly wider than the amendment? I have absolutely no problem with that, as those who have served under my chairmanship will know. As far as I am concerned, the Committee can have a stand part debate at the beginning of a clause or at the end, but it cannot have both. Therefore, if the Committee chooses now to widen the debate to embrace the stand part debate, that is all right by this Chairman. However, please understand that I am likely to rule later that there should not be a stand part debate.
Mr. John Burnett (Torridge and West Devon): I welcome you, Mr. Gale, and the Chief Secretary. I shall take up the invitation to widen the debate slightly, particularly in the light of comments that have been made on the clause and the very wide definition of ''purchaser''.
The Law Society of England and Wales suggests that it would be of considerable assistance to delete the words ''or is a party to'' from subsection (5). I hope that the Chief Secretary will consider that. The provision makes the tax bite extremely widely. For example, if a lessee requires a landlord's consent for the grant of a sub-lease and, as a result of consent being given, there is an increase in the value of the landlord's interest—that would be possible if the outgoing sub-tenant were a company of straw or a company of less value, and if the incoming sub-tenant were a FTSE 100 company, which would be a valuable tenant—that would constitute an acquisition of a chargeable interest under clause 3(3)(c)(i) by the landlord, who would become a purchaser, notwithstanding the fact that he had given no consideration. In those circumstances, the landlord and lessee would be treated as joint purchasers under clause 103, and the landlord would be jointly liable for any stamp duty land tax chargeable on the lessee, even though the landlord had paid no consideration. I am anxious for the Chief Secretary to put on the record his views of the operation of the clause in the light of those points.
I reiterate what the hon. Member for Hertford and Stortford (Mr. Prisk) said. The tax has a long history—I think that the hon. Gentleman said some 200 to 300 years. It was a voluntary tax in many ways. People did not have to pay it, but they could not register a property if they had not stamped the written documents, and they could not litigate on any document that required stamping.
Column Number: 294
Mr. George Osborne (Tatton): The hon. Gentleman says that the tax was voluntary. The American colonists did not think so when the stamp duty was imposed on them. It led directly to the American revolution.
Mr. Burnett: I regret that my knowledge of that aspect of history is incomplete. I can tell the hon. Gentleman only that unless a document was stamped, it could not be exhibited in court. In addition, people could not register their title if the property was unregistered.
The tax was presaged by a momentous debate on electronic conveyancing in Westminster Hall on 9 November 2000, for which I was fortunate enough to draw the short straw. The Government spokesman was Mr. David Lock, the former Member for Wyre Forest and an able Minister, who, regrettably, is not still with us.
Mr. Wilshire: Regrettably?
Mr. Burnett: Indeed.
A system of electronic conveyancing is going to be introduced. There will be substantial changes in stamp duty law. The message that I receive from the professional bodies and other practitioners is that there has not been sufficient scrutiny of the effects of the legislation, and that there is a lacuna. Let us hope that we hear some reassurance from the Chief Secretary and that we have adequate time to debate and scrutinise far-reaching changes to the law.
|
