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MPs pass 200 pages of tax law in four hours

7th Apr 2005
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Houses of ParliamentThe Finance (No 2) Bill 2005 passed all of its House of Commons stages without amendment on Wednesday, 6 April.

Explanatory notes to the Bill, which has 106 clauses and 11 schedules, are available on the Treasury website, and the Inland Revenue provided links to the Bill and related documents on the Revenue website.

The Bill is scheduled to be taken through all of its House of Lords stages today, 7 April.

In a poorly-attended Commons debate, Conservative MP Michael Fallon declared that "given today's situation ' we must take the wording of the clauses on trust".

He said: "If discussing 11 clauses in 1992 was a constitutional outrage, what is discussing 106 clauses and 203 pages of legislation in four hours?

"' We are setting a bad precedent by passing so much legislation on to the statute book without proper scrutiny. If it was a constitutional outrage in 1992 to consider 11 clauses in four hours, the outrage is far greater today. In the end, hon. Members and other bodies outside this House will regret what we are doing this afternoon."

Fallon complained that it was "extremely unsatisfactory that more than 100 clauses, and more than 200 pages of financial legislation, will pass into law without their being properly scrutinised".

The ICAEW Tax Faculty said: "Although the majority of the anti-avoidance legislation has been left out, it still makes for a hefty bill containing some new and quite complex legislation which could have benefited from more time for parliamentary scrutiny."

Anti-avoidance measures
Paul Boateng, chief secretary to the Treasury, said the Bill introduces anti-avoidance measures in clauses 85 and 87 to 91 "that seek to prevent avoidance when there are contrived claims of artificially high double tax relief '"

"Alongside that, clauses 59 to 79 will introduce anti-avoidance legislation for film relief," he added.

Introducing the Bill, Boateng said: "For a tax system to be effective, everyone must pay their fair share of taxes and receive the credits that they are entitled to and that is why the Government have already published proposals to prevent the avoidance of tax on capital gains by people using options to sell or buy assets at uncommercial prices and to close a loophole in the controlled foreign company - or CFC- rules that are designed to prevent UK multinationals from diverting profits to low-tax regimes.

"We have set out legislation to close arrangements that seek to avoid or reduce income tax and national insurance contributions on remuneration by using employment-related securities. As outlined in the pre-Budget report, we have published proposals to remove annuities and other annual payments from the types of payment treated as charges on income.

"The Government are also committed to closing a number of marketed avoidance schemes that involve financial products that have been disclosed under the rules introduced in the Finance Act 2004, and as announced in the Budget, to legislating to counter the exploitation by companies of differences within and between tax codes to get a UK tax advantage.

"The Government believe that these measures and others that were included in the original Finance Bill presented to the House are essential for an effective, principled, targeted and fair tax system. It is therefore our full intention to introduce a second Finance Bill after the election - should it be the wish of the British people - in which the measures not included in this revised version will be brought back. We will, of course, aim to ensure that the statutory dates for these measures will continue to apply, as announced in the Budget."

Andrew Goodall
Editor, TaxZone

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Replies (3)

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By NeilW
08th Apr 2005 12:18

'fair share' definition
Obvious definiton - whatever GB and his cronies determine.

Remember that we now live in a nanny state. Be thankful that GB leaves us anything at all. In his ideal world he would be handing out 'pocket money' having taxed 100% of all our salary.


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By peter465
07th Apr 2005 12:46

The Chancellor may have stripped something out of the Finance (No2) Bill 2005 but it is apalling to see that members of parliament passed a bill containing 203 pages of detailed legislation on TRUST. How can we believe in a system that works like this. It is just the level of detailed scrutiny that we can expect to be given to legislation by our politicians (see Pre Owned Assets from last years Act to name just one poorly drafted item), so we should be satisfied. Or was it a case of them wanting to get quickly to the hustings in order to secure a further term in Parliament a good salary, large expense account and a secure pension and who cares if none of us can understand the tax system anymore! In 1992 Labour forced the government to have a true skeleton bill why didn't the Tories or Liberals do the same this time? Perhaps it will be a good question to ask any of these former MP's when they ask for our vote!

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By AnonymousUser
07th Apr 2005 13:11

Both the Courts and the tax authorities like to pretend that they are 'giving effect to the intentions of Parliament'. How will they do this when Parliament's intention in passing this legislation was to bunk off early and go home for their tea?

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