Thank you, Mr Amess, for calling us back to order. I shall go back to my questions for the Minister.

How many £2 million-plus properties will not be subject to the annual charge? How much is the annual tax on enveloped dwellings expected to raise on an annual basis? The figures are possibly a little convoluted in terms of how the overall revenue impact is calculated. How much will the administration of the annual tax on enveloped dwellings cost? That is a key factor to consider when looking at the overall benefit of this targeted measure.

We have a large number of clauses to consider in one grouping and it is important to touch on some of the other clauses in the group. Clause 95 sets out who is liable for the tax where a property is held by a collective investment scheme. Can the Minister indicate what the likely split of tax receipts is expected to be between the different categories of chargeable persons—namely, companies, partnerships with a corporate member and collective investment schemes? Has HMRC modelled that? If the Minister does not have that information available just now, will he write to the Committee to confirm whether that modelling has been undertaken?

Clause 96 sets out the amount chargeable, which depends on the value of the property. For a property valued at £2 million to £5 million, the annual charge will be £15,000; for a property worth £5 million to £10 million, the charge will be £35,000; a £10 million to £20 million property will be charged £70,000; and a £20 million property will be charged £140,000. The charge will be levied on a pro rata basis where the corporate vehicle is not within the charge for the whole period.

However, there are some oddities in the design. A property worth £20 million will incur a £140,000 charge, equal to 0.7% of the value, and a property worth more than £100 million will pay the same £140,000 charge. Concerns have been expressed about a cliff-edge effect. We need to understand how the bandings were arrived at and whether they are correct and fair. The clause is no doubt aimed at providing that reassurance of fairness, but I hope the Government have given full consideration to whether it will achieve that in reality.

The tax burden in percentage terms of the most valuable properties will be less than the tax burden on properties that are valued at just over £2 million. Is the Minister convinced that the scales involved and the marginal rates have been devised correctly? Why has a slightly more progressive approach to the tax not been taken, and why have those particular bandings been arrived at?

I have a couple more questions on clause 96. How will the charge be funded if the corporate vehicle does not generate any income? Would that charge then transfer on to individuals, or would the revenue simply be lost? Would the payment of the annual charge be exempt from any charge under the remittance basis rules? I appreciate that a lot of exemptions are drafted into the legislation, but it would be useful to have clarity on that point.

Clause 97 deals with “interim relief”, which, like the name “annual tax on enveloped dwellings”, does not illuminate the content very much. I will go straight to my questions on the clause, rather than going into the details of the clause itself. Reliefs from annual tax enveloped dwellings applied from April 2013, but the reliefs from SDLT will not apply until Royal Assent. Could that potentially create anomalies and lead to stalling in commercial activity, while businesses wait for SDLT reliefs to come into effect? How many businesses are expected to benefit from interim relief on an annual basis? It would help the Committee if the Minister would clarify those issues.

Clause 98 provides that the charge will increase in line with CPI measures of inflation each year, and that will be effective from the second year of the charge. The Government said that if CPI for September 2013 is 2% higher than for September 2012, the annual charge will increase by 2% with effect from 1 April 2014. The economy has flatlined, but property prices have not plunged, so what will be the impact of a rising property market on the number of properties caught by the annual charge over the next 10 years? I am interested in hearing clarification of why the Government chose CPI as a measure, rather than the property index, which some would argue would track the growth more accurately.

In relation to clause 99, on the taxable value, will the Minister confirm who will operate the banding check service, and how much it will receive as an annual budget? How many valuations do the Government anticipate will be required each year? Is the Valuation Office Agency adequately staffed for that work? Do additional resources need to be allocated to meet that challenge?

Has the Minister worked through the provisions on the adjustment of amount charged? To recap, there is an annual chargeable amount, as per clause 96. That can be reduced under clause 97, where relief is available for commercial activity, or following a sale. To get the amount of tax due, if a reduction is available, we have to read through to clauses 102 and 103. Clause 102 defines the adjusted chargeable amount, which would be pro rata, based on the number of days chargeable for the period. However, has the Minister considered the complexity of those roles? How many defined terms did the Minister encounter in the definition of “adjusted chargeable amount”? We counted five. I challenge Committee members to get their heads around the complexity of the clause. Adjusted chargeable amount means

“the total of the daily amounts”,

which is defined in clause 102(2) for a “single-dwelling interest”, which is defined in clause 105. Daily amounts are defined by reference to the term “actual day”, which is determined by a calculation for a chargeable period, defined in clause 96(8). Actual day refers to the relevant day, which is defined in clause 96(5). One questions whether the drafting actually came from the Office of  Tax Simplification, because it achieves precisely the opposite of simplifying the legislation, and makes it incredibly complicated and cumbersome for the individuals and tax professionals who need to stay on the right side of it.

The Minister has power to introduce new exempt interests in clause 104(7). If he could give some examples, it would be helpful. Clauses 110 to 117, relating to the meaning of “dwelling”, are, again, highly complex. The legislation defines a building or part of a building as a dwelling

“at any time when…it is used or suitable for use as a single dwelling, or…it is in the process of being constructed or adapted for such use.”

I would be interested to understand why there is a lack of definitions in this part of the Bill. There does not seem to be any definition of “suitable for use”. For example, if I run a clinic from a residential building in Harley street, will that building be suitable for use as a single dwelling, although it is also used for commercial purposes? If someone plans to convert a shed at the bottom of the garden, how will that be treated? The Treasury has the power to modify the meaning of use of dwelling, but if the Minister could clarify what such modifications in the legislation might include, it would be helpful to the Committee and to those using the legislation if it passes through the Committee and receives sufficient votes.

How many new dwellings does the Minister expect to enter the charge in the next 10 years? It would be useful for the Committee to understand the impact of the measure. On new dwellings, conversions, demolitions and so on, it is unclear which body will decide whether a building is beyond use, and therefore whether the exemption will apply. Given the impact of the various exemptions in the Bill on the overall revenue expected from the measure, it would be useful to consider the exemptions in detail to ensure that they do not simply become another vehicle for avoiding tax unnecessarily, and that they have been fully thought through.

On clauses 130 to 150 and the section on reliefs, I mentioned in my earlier comments that clause 97 provides for interim relief and a reduction in tax where a commercial activity takes place, and the next set of clauses sets out what commercial activity qualifies for the relief. There are a large number of reliefs from the annual charge for genuine commercial activities that meet the legislative conditions. Relief is available for property development businesses, property rental businesses and property trading businesses, and there are also anti-avoidance provisions to ensure in many cases that relief is not available where the dwelling is occupied by persons connected to the corporate owner.

It is worth noting that properties run as businesses can benefit from relief. That includes venues run as wedding venues or which provide accommodation or other services. The relief may also be used for historic homes that are run as a qualifying trade. Properties qualify for relief under the Bill if they are open to the public with access to the interior for at least 28 days a year on a commercial basis, provided that the public are offered the opportunity to make use of, stay in or otherwise enjoy the dwelling. The public must have access to a significant part of the interior, but there is no requirement that the property must actually be visited by members of the public for the 28 days, nor is the  relief restricted where there is owner-occupation. I understand that there should be further guidance about how that relief will operate, but there are sincere concerns that it could be open to avoidance if an artificially high market rate is advertised for staying in the property, which would deter visitors from coming. If someone charges them enough, they will not come, yet the person has made it available. How will that be judged and measured?

Properties held to provide employee accommodation may be relieved. There is also relief for farmhouses. Various details are given about how that relief would apply.

The key questions about the measure are as follows. How many businesses are expected to benefit from the reliefs? I return again to the impact note, which states the amount of reduction, in terms of revenue, that will come from the operation of the reliefs. We must ensure that they have been well thought through and will be correctly applied and not simply used to avoid the charge. That would undermine the Government’s stated intention as to how the tax will apply. What systems and checks have been put in place to ensure that the reliefs are being properly used and not abused? There is a requirement to file one return for each property. Can the Minister confirm that that means that if one group owns a residential property portfolio in which multiple properties can claim relief, there will be a requirement to file a return for each property claiming relief? Again, the administrative burden needs to be factored in with regard to the cost and loss of revenue from the measure.

I made comments previously about the provision on

“a significant part of the interior” and access to it. If the Minister could clarify how that will work in practice, it would be helpful to the Committee.

I am moving towards the end of my comments on these clauses. I want to focus now on the administration of the tax. I have raised on a number of occasions some of the concerns relating to that. How far advanced are HMRC’s preparations for collecting the ATED tax? Obviously, HMRC needs to be ready to receive the first tax payments on 31 October. It would be useful to understand whether HMRC is fully prepared and geared up for that, because obviously there is no point in voting through the changes if the administration is not there to ensure that the tax is received.

Let us say that a company incorporated outside the UK was subject to double taxation in relation to the annual charge. There seems to be no clarity in the legislation at the moment as to how that would be relieved, so if the Minister could confirm the position, that would be helpful.

This is obviously very complicated legislation. We have dealt with some of the main concerns and queries in the brief time we have had this morning. I am sure that for those who will be subject to the charge and those who will be administering it or providing advice about it to potential clients, support will need to be provided by HMRC in the form of clarification, particularly in the early stages of the charge’s implementation. Therefore, it would be helpful if the Minister could confirm how much money will be put into the ATED helpline—what cost will be associated with that—and whether additional staff will be in place at the opening of the helpline to  assist taxpayers, or HMRC customers, with their initial returns, which will inevitably result in queries and concerns being raised.

That concludes my comments on the part 3 group of clauses. I shall take your guidance, Mr Amess, on whether clause 64 will be dealt with at this stage or in the next group.