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Mr. Prisk: The Paymaster General has run through the issues raised in a helpful manner. As I said, this is a modest amendment; in fact, it is perhaps better described as shy. I am grateful to the right hon. Lady for elaborating on the points raised. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 79 ordered to stand part of the Bill.
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Clause 80
Vans
Question proposed, That the clause stand part of the Bill.
9.45 am
Mr. Quentin Davies (Grantham and Stamford) (Con): May I ask for your guidance, Mr. McWilliam? As you will see, the main effect of the measure is contained in schedule 14. I do not want to try your patience by speaking for too long in the clause stand part debate on the general issues raised by the proposal, only to be told that I have lost my chance to speak on schedule 14. It would be helpful to know what your views are.
The Chairman: The clause is very narrow. It merely gives effect to the schedule and states which year it has effect from. The meat is in the schedule, so will the Committee please have the debate when we get to the schedule?
Question put and agreed to.
Clause 80 ordered to stand part of the Bill.
Schedule 14
Vans
Question proposed, That this schedule be the Fourteenth schedule to the Bill.
Mr. Davies: This is a good example of the Government at their worst in tax matters. It is a small example, but it is quite interesting. It is a small vignette of the major problem that we face. We know that the Government have lost control of fiscal policy, as I argued in detail on Second Reading. That was never refuted. They desperately need money. They are borrowing £37 billion or £38 billion and they are thrashing around in desperation looking to get money back from any taxpayer they can find who may be vulnerable to a new provision of this kind. Their eyes have alighted on van drivers, and I am afraid that van drivers are therefore being targeted and that as much money will screwed out of them as possible. That is basically the purpose of the measure.
Another aspect of the schedule, which is a microcosm of the Bill, in that it is extraordinarily heavy-handed. The Government are using a sledgehammer to crack a nut, or, perhaps I should say, a van driver. The schedule is six and a half pages long, and, as if that was not enough, there are another six pages of explanatory notes. When there are as many pages of explanatory notes as there are pages in the Bill, something is clearly wrong. There are endless laborious definitions of new bureaucratic concepts such as business travel requirements, commuter use requirements and restricted private use provisions.
There are even two equations. They are mercifully relatively simple linear equations, but I do not doubt that one day the Government will come up with provisions that require us all to solve differential
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equations in order to work out our tax liability, and that we will go to jail if we do not succeed. I am afraid I shall be joining the group going to jail—I better not say that because it might be a rather seductive prospect for the Government; I do not want to give them ideas.
I do not know whether it is true that most van drivers naturally think algebraically and will think it helpful to have their tax liability expressed in terms of equations. However, it is possible that not all van drivers think algebraically. The Government must think about the complexity that they are introducing into the Taxes Acts with measures of this kind. They are not defining a liability to a purely corporate tax, such as petroleum revenue tax, which no individual ever pays.
It is certainly not good enough to say that the employer will have the task of assessing employees under the provision, because—I hope that the Government will not disagree with me—it is important that employees understand the basis of the tax code that the employer gives them. Any kind of mystification that makes it more difficult for employees to understand their position under PAYE is inherently undesirable. It is not an excuse for this kind of complexity to say that under PAYE the employer will have the burden of doing most of the calculation.
Nor is it an excuse—I say this having worked with the Charted Institute of Taxation for many years —that people who do not understand such things can always go to professional advisers. That is not an acceptable answer from the Government. I do not believe that that is right, and nor do members of the Chartered Institute of Taxation, which is high-minded about such matters and not cynical. It believes that we should not generate additional, gratuitous complexity simply to provide an earning stream for advisers. Undue complexity is an important issue and anyone who cares to waste quarter of an hour of their lives by reading the schedule in detail will recognise that it is extremely heavy-handed and convoluted.
Rob Marris: Does not the hon. Gentleman accept that, since 1993, when the £500 was introduced, there has been some inflation and, furthermore, a change in the nature of people's vehicles? Some people avoid company car taxation by obtaining what purports to be a van because of the changing nature of available vehicles.
Mr. Davies: I fear that I cannot go along with the hon. Gentleman on either of those points. There has been some inflation, but not of 600 per cent., which is the difference between the £500 and the £3,000 that van drivers may have to pay if we accept the schedule. I am not an expert on the changes in the types of vehicles available, so I shall leave him to enlighten the Committee if he feels that that is relevant to our deliberations.
The sad thing is that, despite this extraordinarily heavy apparatus for attacking poor van drivers, the result is imprecise and slovenly drafting which leaves open all sorts of ambiguities. I refer the Committee to paragraph 5 of the schedule, which inserts new section
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155 into the Income Tax (Earnings and Pensions) Act 2003. New subsection (4) states that the restricted private use condition is met if
''the commuter use requirement is satisfied throughout the year . . . or the extent to which it is not satisfied during that period is insignificant''.
What does ''insignificant'' mean? If you use a van once a month or once every three months, is that significant? That is extremely unhelpful and will be difficult not just for the van driver but for the employer to get right.
The Chairman: Order. I draw the Committee's attention to the use of the word ''you''. The only vehicle I use is my wife's car and only at her mercy.
Rob Marris: May I suggest that the hon. Gentleman is trying to have it both ways? He criticises the Government for introducing heavy-handed, over-complex legislation, but cites a new subsection containing realistic flexibility and slags off the Government for that.
Mr. Davies: The hon. Gentleman is 180° wrong. The Government have got it wrong because they seem to think that by drafting this extremely heavy schedule they can accurately define all possibilities and leave no room for doubt, but they have not succeeded in doing so. I shall propose a way in which that might be possible using a 10th or less of the words in the schedule to produce a fair system without those ambiguities. I refer the Committee to new subsection (5) which states:
''The commuter use requirement is satisfied at any time if— the terms on which the van is available to the employee at the time prohibit its private use otherwise than for the purposes of ordinary commuting or travel . . . neither the employee nor a member of the employee's family or household makes private use of the van at the time otherwise than for those purposes.''
Does ''at the time'' mean at the time when the commuter run or travel is being undertaken, or at any time when the van driver has the theoretical liability because he has use of the van? Great ambiguity is being introduced into the Bill. If it means the former, narrower definition, does that mean that someone cannot drop their child off at school on the way to work while claiming the commuter use? Perhaps the Government will explain what they have in mind, because it is unclear to me what ''at the time'' means. Perhaps it means just the relevant part of the year when the van is available.
Similarly, new subsection (7) states:
''The business travel requirement is satisfied at a time if the van is available to the employee at the time mainly for use for the purposes of the employee's business travel''.
''Mainly'' is identified in the Taxes Act 1988 as being more than 50 per cent. Are the courts expected to apply that definition in this case? Again, the provision is loosely drafted, despite the enormous effort that has gone into producing excessively long and convoluted legislation. It is not a good day's work by the Government.
I shall make three points in conclusion. First, the provision is unfair. It involves an enormous increase from £500 to £3,000, which is not at all reasonable.
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More important, you might inadvertently—I use the word ''you'' in the sense of ''one''. I suppose that one is allowed to make use of the impersonal you.
The Chairman: Order. The third person is always in order.
Mr. Davies: ''One'' sounds a little stilted, which is why I tend to avoid it. A van driver—third person singular—may inadvertently exceed the legitimate use of his vehicle for non-business purposes. For example, if he drops off a child at school once, it is insignificant. If he does it regularly, is it significant? What happens if he does it once a week? We just do not know.
A driver could fall into the trap of going over the limit and suddenly find himself being assessed for a benefit in kind of £3,000, possibly for something that took him five minutes out of his way, or did not take him out of his way at all but simply involved stopping for 30 seconds outside a school. That is not reasonable, and those on the Treasury Bench are not rushing to their feet to correct my interpretation.
Secondly, the provision is striking in that it is completely unnecessary. It does not cover the self-employed driver at all and, anecdotally, most vans are owned by self-employed business men. My understanding of the Taxes Act 1988 is that it is perfectly legitimate for a self-employed person to claim the portion of the use of a van that is for business as a business expense, and not to claim the portion that is for private use. The balance might vary from year to year: for example, 60-40, 50-50 or 70-30. That system works perfectly well. People discuss with their inspector of taxes, if he wants to quibble about it, what reasonable business use is. Why not replicate such common-sense arrangements, which are already a part of tax common law, rather than thrust this extremely onerous bureaucracy on us?
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