Examination of witnesses (Questions 29
WEDNESDAY 24 JANUARY 2001
and MR ADAM
29. Thank you very much, ladies and gentlemen.
I think, Mr Munro, you are the project leader. Although some of
you are from the Inland Revenue and at least one person is from
the Parliamentary Counsel Office, you are with us as the project
team. Would you introduce yourself and, perhaps, introduce your
(Mr Munro) Certainly, Chairman. As you say, I am the
project director for the rewrite and I would hope to be able to
assist the Committee on any questions they have in particular
relating to the background to the project and the process of consultation,
which has already been discussed. On my right, Helen Caldwell
and Mark Hudson are both members of the Office of Parliamentary
Counsel and are on loan to the project. Helen is the leader of
our drafting team and Mark is one of the members. On my left is
Robin Willis and Satnam Singh. Robin is the leader of the rewrite
team which has been producing, if you like, instructions for the
drafting team on Capital Allowances. He is a permanent member
of the Inland Revenue. Satnam Singh is a tax professional who
we recruited on fixed term contract from the private sector who
has been working for Robin's team.
30. Thank you very much. What I suggest is perhaps
we just begin with a short discussion with each part of the team
on the broad approach and perhaps these examples that I referred
to which you have produced and discuss them at this stage with
the Committee. Thereafter we will plunge into the text of the
Bill itself and deal with it part by part, I would suggest, following
your helpful table provided by your project team showing how it
is divided up.
Can we begin just with a general drafting point, the simplification
of the drafting. I cannot resist following up on Lord Brightman's
question a moment ago and repeat what I have just been saying
to my neighbour. I was never able to understand as Chancellor
why each year Finance Bills got longer and longer. Looking at
Gordon Brown's Budgets and my Budgets; the Finance Bills they
produce are twice the length of those of Lord Howe's produced
in the early 1980s. I am not persuaded the complexity we had in
those days is greater now. It started to go wrong in the 1980s
when things started to become lengthy. I wonder if the draftsman
amongst you have any explanation why it is so long and why putting
it into plain English has not produced any brevity at all? We
have these door stopping Bills coming forward which mean that
future Finance Bills will have to be of some extraordinary lengths.
(Dr Caldwell) I think the answer to that is that the
complexity really is a matter of policy and it is not our brief
to make significant changes in the policy. That is why we cannot
make the legislation significantly shorter. All we can try to
do is to try to make the legislation easier to understand even
though it is so complex.
Chairman: I am not prepared to start
arguing whether Lord Howe's policies were so much clearer and
simpler than those of his successors that they enabled the Bill
to be shorter though he probably will.
Lord Howe of Aberavon
31. I would like to follow up on that with Dr
Caldwell. My recollection is the Finance Bill (No. 1) of 1979,
which was the one introduced after the election had been announced,
introduced by Dennis Healey in order to consolidate the existing
tax system and make one or two adjustments on rates was one of
the shortest on record. It introduced no policy changes and it
simply changed the rates. It was followed in due course by my
first Finance Bill which was done in a hurry in June 1979 and
that was not notably long because we did not have that much time
to put it together. You come to my 1981 one I think with the Business
Start Up Scheme and then in 1982 with the Business Extension Scheme
and you were beginning to see policy changes immediately. Is it
not the case that you are making, Dr Caldwell, the length is almost
entirely a produce of policy changes but not exclusively, also
generated by necessary tax avoidance changes and by responding
to representations made by the private sector for "improvement"
of what is already there. Is that a fair summary of why it is
(Dr Caldwell) Yes, I think that is right. I think
we are in agreement there that the complexity is, by and large,
a product of policy. I think one of the problems is that if you
make a little addition this year and it does not seem too complicated,
then next year when you make another addition you are actually
adding an extra layer on to something that has become more complex.
It is with this exponential curve that you get complexity because
each extra layer makes the next layer more difficult to add.
32. Can you perhaps begin by briefly explaining
the approach you brought to this particular exercise? You were
dealing with slightly more than ten years of that, the last consolidation
was in 1990. This time you are rewriting the up-to-date situation
on Capital Allowances. What are the broad principles brought to
bear so far as the language, drafting and lay out are concerned?
(Dr Caldwell) I think the way we see it is that we
are not really able to make significant changes in policy and
we have got a lot of very complicated rules to get across. What
we are giving the reader is we are giving him a big problem because
we are going to be putting a very big strain on the reader's brain,
and in particular on the reader's memory when he is trying to
understand these very, very complicated legal rules. That is the
underlying problem we are trying to address. We have been doing
five main things to try and tackle this problem for the reader
of brain strain, if I can put it like that. The first thing that
we are doing to try and help him out is to put things in the right
order which can lead to restructuring of provisions in the current
legislation. The second thing that we are trying to do to help
out is to deliver information in the right sized pieces, if I
can put it like that, and that often means shorter clauses and
shorter subsections. The third thing that I think we have been
doing is that we are trying to avoid particular drafting techniques
which assume that the reader is carrying around a big chunk of
text inside his head. That may sound a rather puzzling thing that
I am saying but if I can draw an analogy. Quite often in the existing
legislation you find that provisions are drafted a bit in the
way you might issue a train timetable for Saturdays and Sundays
and you say that the trains that are going to run on Sundays are
the same as weekdays except that one of them is not going to stop
at Slough. That kind of approach presupposes that you have got
an awful lot of information already inside your head and you can
work out the message that is being conveyed to you. We have tried
to avoid those kinds of drafting techniques. The fourth thing
that we have been trying to do to help the reader out is to use
words that are familiar, as far as we can, where it is possible
to do that without changing the legal effect, to keep the language
register in ordinary English. The fifth thing that we have been
trying to do is to include signposts, to offer reminders to the
reader of where he is about to go to. That, again, we hope will
help to ease the brain strain. I have given those five types of
things we are trying to do. If you like I will give you some illustrations?
33. Yes. I was going to say I hope you have
got the Committee's request that perhaps we might have one or
two illustrations which you or your colleagues could take us through
of a before and after kind of existing tax legislation and the
equivalent piece of legislation as redrafted. Is there something
to be distributed to us which will illustrate this?
(Dr Caldwell) The first thing I was going to offer
by way of illustration, the first point that I am making is that
we are restructuring things, trying to put things in the right
order so that things are in the right place and are easier for
the reader to follow. I thought an illustration of that could
be found by making a brief comparison of the structure of the
existing capital allowances legislation compared with the structure
of the Bill. I am looking in overall terms here. There is a piece
of paper that you may have available to you which has a table
which sets out on the left hand column the structure of the existing
Baroness Cohen of Pimlico
34. CA2, headed Summary of Changes
(Dr Caldwell) No, I am afraid not.
Dawn Primarolo: No, CA4, 6 and 7.
35. Can you give us the numbers you are referring
(Dr Caldwell) I am afraid it is this piece of paper.
It is your CA4 that I am referring to.
36. CA4 has two columns. CA4, the left hand
column is headed "Existing legislation" and the right
hand column is headed "Capital Allowances Bill". Has
every Member of the Committee got a copy?
(Dr Caldwell) Just looking at this, there are some
very simple points one could make about the different structures
that we have got for the legislation. If one looks at the Capital
Allowances Act 1990, the first part of that Act is about industrial
buildings, and industrial buildings is not the most important
allowance in financial terms. The second part of the Capital Allowances
Act is about machinery and plant which is, in fact, the most important
allowance in capital allowances terms. The third part is about
dwelling houses let on assured tenancies. That is about allowances
which actually are moribund because the expenditure has to have
been incurred and they will run out after a while. Just looking
at that, and comparing now how we started the Capital Allowances
Bill, we started with an introductory part to give some basic
concepts for the reader and then we have moved on to the first
allowance. We have made the first part, the part which deals with
the first actual substantive allowance, the part about plant and
machinery which is the most important allowance in financial terms.
Then Part III, which were these moribund allowances, we have demoted
those to the end of the Bill because they are not going to be
of such great interest to the average reader. So we hope, therefore,
that the structurethat just gives some exampleswe
have adopted in the Bill will be more helpful to the reader. An
illustration of what Mr Broke was saying viz. that it is more
37. We will turn to the introduction in detail
in a moment. This process of having Part 1, the Introduction in
these general terms, that seems to be rather new itself actually.
Is there tax legislation which has tried this before?
(Dr Caldwell) I think you might not want to start
with the same Clause 1 as we have in a policy tax Bill. It might
not be such an interesting thing to kick off with in the parliamentary
38. That is your first illustration. Could you
give us another illustration?
(Dr Caldwell) Yes. The second thing I was saying we
were trying to do was about delivering information in the right
sized pieces. There is an example here, it is called, I am afraid,
39. Has everybody got CA7? Clause 159 of the
Capital Allowances Act 1990.
(Dr Caldwell) Yes, that is right. What Section 159
of the 1990 Act does is it deals with two quite distinct topics.
It deals with some rules about what is capital expenditure and
then it moves on to deal with some rules about when capital expenditure
is to be treated as incurred. Those two topics seem quite different.
What we have done in the Bill is to break Section 159 up into
two clauses, they are Clauses 4 and 5 of the Bill, because we
regard the two topics as being discrete and it is more useful
to present them as separate entities.
1 Evidence, p 3. Back
2 Evidence, p 14. Back
3 Evidence, p 24. Back