Finance Bill

– in a Public Bill Committee am ar 28 Mehefin 2005.

Danfonwch hysbysiad imi am ddadleuon fel hyn

[Sir Nicholas Winterton in the Chair]

Photo of Nicholas Winterton Nicholas Winterton Ceidwadwyr, Macclesfield 10:30, 28 Mehefin 2005

I welcome all members of the Committee to the sitting. I hope that they had a good, restful and fruitful weekend, part of which was beautiful in respect of the weather. We now return to the rigour of the third Finance Bill of 2005.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

On a point of order, Sir Nicholas. I wish to clarify the Hansard record of our sitting last Thursday, which could be capable of a wider interpretation than I had intended. I fear that the problem is down to me, not the Hansard reporters. I stress that point. We were debating Opposition amendment No. 38 and controlled foreign companies. I referred to companies that have been unable to pass any of the exemptions under the controlled foreign company provisions and thus would be caught by the CFC legislation. I regret that, during what was quite a long day, the sentence

“In any case, there can be no justification for treating a CFC, which is by definition set up for tax avoidance purposes, more favourably than other companies”—[Official Report, Standing Committee B, 23 June 2005; c.141.]

potentially has a much wider interpretation.

I apologise to the Committee. I was not concentrating as much as I should have been on matters under discussion. I hope that the hon. Member for Runnymede and Weybridge (Mr. Hammond) will accept that that one tiny sentence does not fundamentally change a huge piece of legislation on controlled foreign companies. I am grateful to you, Sir Nicholas, for giving me the opportunity to put the record straight. I apologise to the Committee for my inadvertent slip.

Photo of Nicholas Winterton Nicholas Winterton Ceidwadwyr, Macclesfield

I am sure that the Committee is grateful to the Paymaster General for her clarification.

Photo of Philip Hammond Philip Hammond Shadow Chief Secretary to the Treasury

Further to that point of order, Sir Nicholas. I am grateful to the Paymaster General for her clarification. It was a very long and hot sitting on Thursday. It was with admirable foresight that you managed to arrange matters so that you would not be in the Chair, Sir Nicholas. Due mainly to the weather, it was not the most pleasant sitting. It is important that, when discussing a Finance Bill in particular, everything that is said is precise, and if it is capable of misinterpretation, that it is clarified at a later stage.

People outside the Room have suggested that two other issues referred to on Thursday afternoon require clarification. In answer to my hon. Friend the Member for Braintree (Mr. Newmark) about Inland Revenue pre-clearance, the Paymaster General said:

“The clearance is binding. If a company has approached the Revenue and gone through the clearance procedure in place as a result of the provisions, and if the HMRC makes a decision, that decision is binding.”—[Official Report, Standing Committee B, 23 June 2005; c.104.]

Lawyers expressed surprise at the expression, “The clearance is binding.” I am told that the al-Fayed case found that an agreement between the Inland Revenue and the taxpayer did not have the force of law and was not capable of enforcement by the taxpayer. I take it that the Paymaster General’s comment was not intended to rewrite the law and imply that a pre-clearance decision was binding—

Photo of Nicholas Winterton Nicholas Winterton Ceidwadwyr, Macclesfield

Order. I fully appreciate the hon. Gentleman’s argument, but we must not reopen that debate. I am permitting clarification of the report in Hansard. The Paymaster General was specific in her remarks, and that was extremely helpful. I hope that the hon. Gentleman can bring his point of order to a conclusion so that we can continue our debate on the Bill.

Photo of Philip Hammond Philip Hammond Shadow Chief Secretary to the Treasury

That is very helpful, Sir Nicholas. Perhaps I can make a suggestion. Clause 31 is the last clause in a chapter that deals with complex matters. The Paymaster General has heard my point of order. Perhaps it might be possible to tie up any loose ends in relation to the chapter in the stand part debate, to ensure that the record is clear.

Photo of Nicholas Winterton Nicholas Winterton Ceidwadwyr, Macclesfield

The answer to that is most certainly yes.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

Further to that point of order, Sir Nicholas. I cannot find the reference; it is not in column 140—[Interruption.] Sorry; it is column 104.

I was saying that the Revenue will consider itself bound by the decision. There is no question of inspection of the court case to which the hon. Gentleman refers. However, I am more than happy to write to every member of the Committee detailing how the Revenue will deal with applications from companies; how, having given its decision to those companies, the Revenue will consider itself bound by what it has said; and why that is perfectly in order with other decisions that have been taken in courts or elsewhere. That matter has been checked.

Photo of Nicholas Winterton Nicholas Winterton Ceidwadwyr, Macclesfield

I am sure that the Committee is grateful to the Paymaster General, and that it will appreciate the letter that she says she will write.