As discussed under the previous clause, stamp duty land tax schemes have sought to exploit uncertainties in current legislation. We therefore welcome the removal of such uncertainties through amending and supplementing the existing legislation or through drafting a replacement set of rules. However, concerns have been expressed by the industry regarding the drafting of the clauses, given that, for example, new schedule 2A of the Finance Act 2003 will have 104 sub-paragraphs in place of the current nine subsections of section 45 of that Act.

The Chartered Institute of Taxation said:

“The draft clauses have been formulated as a complex set of prescriptive rules. Legislation of this nature tends to create opportunities for structuring transactions in a way that is not intended thereby defeating its object of preventing abuse. We do not think this is the right approach to tightening these rules.”

The institute also shares the concern of the Stamp Taxes Practitioners Group that the new legislation is likely

“to severely hamper genuine commercial and residential property transactions because it is not readily intelligible to conveyancers and property lawyers who will need to apply it in practice. The drafting is tortuous, subsales (the most common type of transaction covered by the draft clauses) are variously defined as ‘pre-completion transactions’, ‘free-standing transfers’ and ‘qualifying subsales’.

Practitioners do not recognise the estimate of numbers of transactions that are likely to be affected by these provisions. There appears to be a significant under-estimate of the likely number of such transactions.”

HMRC has promised clear guidance upon which taxpayers and their advisers will be able to rely. However, I am sure the Minister will agree that, particularly where guidance attempts to soften the harsher effects of prescriptive legislation, there is a fine line between interpretation and concession, which goes beyond HMRC’s powers. If guidance crosses the line into concession, the ability to rely on that guidance is thrown into doubt. Will the Minister outline what process will be undertaken to ensure that the guidance is clear and fit for purpose and will not fall victim to such pressures?

It is perhaps inevitable that the guidance will not be able to cover every possible situation, but a number of situations have been highlighted because there is concern that the guidance will not clarify them and that they will remain distinctly unclear. If the Minister is aware of the Chartered Institute of Taxation’s concerns about the technical application of the new legislation and the guidelines, it would be helpful if he could provide reassurance that they have been considered by HMRC and the Government in drafting the provisions.

The institute has raised a number of issues, which I will not go into for the sake of brevity. However, will the Minister comment on the variety of concerns that have been expressed about the drafting of the legislation and the lack of clarity? The new legislation could facilitate additional avoidance rather than deliver the intended aim, which, as the Minister says, is that everyone pays stamp duty land tax fairly and equitably.