division_name: Finance Bill - Non-tax payers
motion: <p>Not amended in the Committee, and as amended in the Standing Committee, considered. 
   <p> 
  (c) expenditure on the provision of a goods vehicle for the purposes of a trade which consists primarily of the conveyance of goods; or
   
  (d) unauthorised expenditure on the provision of machinery or plant for use primarily in--
   
  (i) agriculture, fishing or fish farming, or
   
  (ii) any relevant activity carried out in relation to agricultural produce, fish or any fish product for the purpose of bringing it to market."
   
  (2) After subsection (3CC) of that section there shall be inserted--
   
  "(3CD) For the purposes of subsection (3CC) above--
   
  (a) expenditure is unauthorised expenditure unless it is authorised, for the purposes of subsection (3CA) above, by the Department of Agriculture for Northern Ireland; and
   
  (b) 'relevant activity' means transportation, storage, preparation, processing or packaging.
   
  (3CE) An authorisation given, for the purpose of subsection (3CA) above, by the Department of Agriculture for Northern Ireland--
   
  (a) may be given either specially (that is to say, so as to apply only to a specified item of expenditure or a specified person) or generally (that is to say, so as not only so to apply);
   
  (b) may, if given generally, be modified by that Department; and
   
  
   
  (c) may in any case be absolute or conditional."
   
  
   
  (3) In subsection (10) of that section, after "section" there shall be inserted--
   
  
   
  "'agriculture' and 'agricultural produce' have the same meanings as in section 6 of the European Communities Act 1972;
   
  
   
  'fish' includes shellfish;
   
  
   
  'fish farming' means the intensive rearing, on a commercial basis, of fish intended for human consumption;
   
  
   
  'fishing' means a trade, or part of a trade, which consists of the catching or taking of fish;
   
  
   
  'goods vehicle' has the same meaning as in the Road Traffic (Northern Ireland) Order 1995;".
   
  
   
  (4) In section 22B of the 1990 Act (withdrawal of first-year allowance on change of use)--
   
  
   
  (a) in subsection (2)(a), for "the period of two years beginning with the date of the incurring of that expenditure" there shall be substituted "the relevant period"; and
   
  
   
  (b) after subsection (2) there shall be inserted--
  <p>Brought up, and read the First time. 
  
   
  
  <p>
   I beg to move, That the clause be read a Second time.
  <p> 
  
   In last year's Finance Act, we introduced a measure to give 100 per cent. first-year capital allowances for small and medium-sized businesses investing between 12 May 1998 and 11 May 2002 in machinery or plant for use in Northern Ireland. The legislation does not come into effect until a day to be appointed by the Treasury. This was necessary to allow time to make sure that the measure would not be anti-competitive.
  <p> 
  
   It is now apparent that some modifications are needed to the scope of the measure to bring it into line with competition law. New clause 7 will make the necessary changes. Once made, we expect to receive confirmation from the European Commission that the measure is not anti-competitive. This will allow us to appoint the day and to bring the legislation into effect. Once that is done, the 100 per cent. first-year allowances may be claimed on any expenditure in the qualifying period.
  <p> 
  
   It may be helpful, and for the convenience of the House, if I outline briefly the areas of change. On transport, the 100 per cent. first-year allowances were never intended to apply to expenditure on machinery and plant for leasing or letting, hire cars, long-life assets, sea-going ships, railway assets or aircraft. New clause 7 will expand the exclusion to cover transport assets, such as lorries or containers used in the freight haulage <p> 
  
   
  
   
  
   5 Jul 1999 : Column 686  
  business. It will not affect the entitlement to allowances on transport assets in other types of business, such as delivery vans of retail businesses, mobile shops or tourist buses.
  <p>Question put and agreed to. 
  <p>Clause read a Second time, and added to the Bill. 
  <p> 
  (a) an asset which is not a mobile asset is a qualifying asset for the purposes of the Oil Taxation Act 1983 in relation to a person ("the taxpayer") who is a participator in an oil field ("the field");
   
  
   
  (b) tariff receipts or disposal receipts of the taxpayer which are referable to the asset are attributable to the field for a chargeable period ("the earlier period");
   
  
   
  (c) receipts of the taxpayer which are referable to the asset for a subsequent chargeable period ("the later period") would not, apart from this section, be tariff receipts or disposal receipts attributable to the field for that period as a result of--
   
  
   
  (i) the taxpayer's ceasing to be a participator in the field; or
   
  
   
  (ii) his becoming a participator in another oil field; and
   
  
   
  (d) not more than two chargeable periods intervene between the earlier period and the later period.
   
  
   
  (2) The Oil Taxation Acts shall have effect, in relation to the later period and any subsequent chargeable period, as if--
   
  
   
  (a) receipts of the taxpayer which are referable to the asset for the period concerned were tariff receipts or disposal receipts attributable to the field for that period; and
   
  
   
  (b) in a case falling within subsection (1)(c)(i) above, the taxpayer continued to be a participator in the field.
   
  
   
  (3) Subsection (4) below applies where--
   
  
   
  (a) an asset which is not a mobile asset is a qualifying asset for the purposes of the Oil Taxation Act 1983 in relation to a person ("the taxpayer") who is a participator in an oil field ("the field");
   
  
   
  (b) tariff receipts or disposal receipts of the taxpayer which are referable to the asset are attributable to the field for a chargeable period ("the earlier period");
   
  
   
  (c) in a subsequent chargeable period ("the later period") the taxpayer disposes of--
   
  
   
  (i) the asset; or
   
  
   
  (ii) an interest in the asset,
   
  
   
  to another person ("the transferee") in circumstances such that section 7 of the Oil Taxation Act 1983 does not apply to the disposal; and
   
  
   
  (d) not more than two chargeable periods intervene between the earlier period and the later period.
   
  
   
  (4) The Oil Taxation Acts shall have effect, in relation to the later period and any subsequent chargeable period, as if--
   
  
   
  (a) receipts of the transferee which are referable to the asset for the period concerned were tariff receipts or disposal receipts attributable to the field for that period; and
   
  
   
  (b) the transferee were a participator in the field.
   
  
   
  (5) Subject to subsection (6) below, any reference in this section to receipts of any person which are referable to the asset for a period is a reference to any sums which--
   
  
   
  (a) are received or receivable by that person in that period in respect of the use of the asset, or the provision of services or other business facilities of whatever kind in connection with its use; or
   
  
   
  (b) are received or receivable by that person in respect of the disposal in that period of the asset, or an interest in the asset.
   
  
   
  (6) In a case falling within subsection (3)(c)(ii) above--
   
  
   
  (a) any sums which are received or receivable by the transferee otherwise than by virtue of his acquisition of the interest shall not be regarded for the purposes of subsection (4) above as receipts of his which are referable to the asset for any period; and
   
  
   
  <p>(b) for the purposes of paragraph (a) above, such apportionments shall be made as may be just and reasonable.
   
  
   
  (7) This section shall be construed as one with Part I of the Oil Taxation Act 1975; and in this section "the Oil Taxation Acts" means--
   
  
   
  (a) the enactments relating to petroleum revenue tax (including this section);
   
  
   
  (b) Chapter V of Part XII of the Taxes Act 1988 (petroleum extraction activities); and
   
  
   
  (c) sections 62 to 65 of the Finance Act 1991 (oil industry).
   
  
   
  (8) Nothing in this section shall be taken to affect the meaning of "participator" in paragraph 4 of Schedule 2 to the principal Act.
   
  
   
  (9) Subject to subsection (11) below, subsection (1) above applies where--
   
  
   
  (a) the disposal by virtue of which the taxpayer ceased to be a participator in the field; or
   
  
   
  (b) the acquisition by virtue of which he became a participator in the other oil field,
   
  
   
  was made on or after 1st July 1999.
   
  
   
  (10) Subject to subsection (11) below, subsection (3) above applies where the asset, or the interest in the asset, was disposed of on or after that date.
   
  
   
  (11) Neither subsection (1) nor subsection (3) above applies where the disposal or acquisition concerned was made pursuant to an agreement which was made before 1st July 1999 and either--
   
  
   
  (a) the agreement was not conditional; or
   
  
   
  (b) the agreement was conditional and the condition was satisfied before that date.'.-- [Mrs.  Roche.] 
  <p>Brought up, and read the First time. 
  
  <p>
   I beg to move, That the clause be read a Second time.
   
  
  <p> 
     Mr. Deputy Speaker  (Mr. Michael Lord):   
   With this, it will be convenient to discuss the following: Government new clause 16-- Petroleum revenue tax: instalments. 
  <p>Question put and agreed to. 
  <p>Clause read a Second time, and added to the Bill. 
  
   <p> 
  (a) in sub-paragraph (1), at the beginning there shall be inserted "Subject to sub-paragraph (1A) below," and after "month" there shall be inserted "(the relevant month)"; and
   
  
   
  (b) after that sub-paragraph there shall be inserted the following sub-paragraph--
   
  
   
  "(1A) Sub-paragraph (1) above does not apply if the relevant month is a month in which any consideration (whether in the nature of income or capital) is received or receivable by the participator in respect of any such matter as is mentioned in paragraph (a) or (b) of section 6(2) of the Oil Taxation Act 1983 (chargeable tariff receipts)."
   
  
   
  (2) Subsection (1) above applies for the purpose of determining whether instalments are payable in respect of chargeable periods ending on or after 31st December 1999.'.-- [Mrs.  Roche.] 
  <p>Brought up, read the First and Second time, and added to the Bill. 
  
   <p> 
  (2) This section has effect in relation to--
   
  
   
  (a) a disposal of a licence or an interest in a licence which occurs on or after 1st July 1999;
   
  
   
  (b) an acquisition of a licence or an interest in a licence which occurs on or after 1st July 1999.'.-- [Mrs.  Roche.] 
  <p>Brought up, read the First and Second time, and added to the Bill. 
  <p> 
  (a) the General Account of the Commissioners of Customs and Excise, or
   
  
   
  (b) the General Account of the Commissioners of Inland Revenue,
   
  
   
  that sum may be lent to the National Loans Fund on that day.
   
  
   
  (2) Subsection (1) above does not apply to any sum to the extent that it is required to be paid, on the day in question, in accordance with section 10 of the Exchequer and Audit Departments Act 1866.
   
  
   
  (3) A loan made by virtue of subsection (1) above shall be repaid before the close of business on the day after the loan is made or, where that day is not a business day, before the close of business on the next business day.
   
  
   
  (4) Subject to subsection (3) above, a loan made by virtue of subsection (1) above shall be made in such circumstances, and on such terms and conditions, as the Treasury may from time to time direct.
   
  
   
  (5) In this section "business day" means any day other than--
   
  
   
  (a) a Saturday or Sunday;
   
  
   
  (b) Good Friday or Christmas Day;
   
  
   
  (c) a day which, in England and Wales, is a bank holiday under the Banking and Financial Dealings Act 1971;
   
  
   
  (d) a day specified in an order under section 2(1) of that Act (days on which financial dealings are suspended) and declared by that order to be a non-business day for the purposes of this paragraph; or
   
  
   
  (e) a day appointed by Royal proclamation as a public fast or thanksgiving day.'.-- [Ms  Hewitt.] 
  <p>Brought up, and read the First time. 
  
  <p>
   I beg to move, That the clause be read a Second time.
  <p> 
  
   New clause 8 allows any cash balances held at the close of business in the bank accounts of the two Revenue departments at the Bank of England to be lent overnight to the National Loans Fund, which will repay what it borrows by close of business on the following business day. That will help the Debt Management Office to manage the Government's cash requirements efficiently when it takes on that role. The DMO will be able to rely on these Revenue department balances being available to help to balance the daily cash flows into and out of the National Loans Fund. That will decrease uncertainty for the DMO, and will, most importantly, prevent it from having to pay to raise cash in the market when there is already cash available within Government.
  <p> 
  
   At the same time, the money will still be available during the business day to cover the possibility that tax repayments due exceed tax receipts on that day. The change will benefit Government, but will not have any effect on the Revenue departments' dealings with taxpayers. New clause 8 is a sensible piece of housekeeping by the Government, and I commend it to the House.
   
  
  
  <p> 
  
     8.15 pm 
   
  
  <p>Question put and agreed to .
  <p>Clause read a Second time, and added to the Bill .
   
  
   <p>
   
  (a) a disposal which, on the occasion on which the beneficiary becomes absolutely entitled as against the trustee to that property, is deemed under subsection (1) above to have taken place; or
   
  
   
  (b) any other disposal taking place before that occasion but in the same year of assessment.
   
  
   
  (2B) For the purposes of subsection (2)(b)(ii) above an asset ('the relevant asset') derives from another if, in a case where--
   
  
   
  (a) assets have merged,
   
  
   
  (b) an asset has divided or otherwise changed its nature, or
   
  
   
  (c) different rights or interests in or over any asset have been created or extinguished at different times,
   
  
   
  the value of the relevant asset is wholly or partly derived (through one or more successive events falling within paragraphs (a) to (c) above but not otherwise) from the other asset.
   
  
   
  (2C) The rules set out in subsection (2D) below shall apply (notwithstanding any other rules contained in this Act or in section 113(2) of the Finance Act 1995 (order of deduction))--
   
  
   
  (a) for determining for the purposes of this section whether an allowable loss accruing to the trustee, or treated as accruing to the beneficiary, can be deducted from particular chargeable gains for any year of assessment; and
   
  
   
  (b) for the making of deductions of allowable losses from chargeable gains in cases where it has been determined that such an allowable loss can be deducted from particular chargeable gains.
   
  
   
  (2D) Those rules are as follows--
   
  
   
  (a) allowable losses accruing to the trustee on a deemed disposal under subsection (1) above shall be deducted before any deduction is made in respect of any other allowable losses accruing to the trustee in that year;
   
  
   
  (b) allowable losses treated as accruing to the beneficiary under this section, so far as they cannot be deducted in a year of assessment as mentioned in subsection (2)(b) above, may be carried forward from year to year until they can be so deducted; and
   
  
   
  (c) allowable losses treated as accruing to the beneficiary for any year of assessment under this section, and allowable losses carried forward to any year of assessment under paragraph (b) above--
   
  
   
  (i) shall be deducted before any deduction is made in respect of any allowable losses accruing to the beneficiary in that year otherwise than by virtue of this section; and
   
  
   
  (ii) in the case of losses carried forward to any year, shall be deductible as if they were losses actually accruing in that year."
   
  
   
  (2) This section applies in relation to any occasion on or after 16th June 1999 on which a person becomes absolutely entitled to settled property as against the trustee.'.-- [Dawn  Primarolo.] 
  <p>Brought up, and read the First time. 
  <p>
   I beg to move, That the clause be read a Second time.
  <p> 
  
   The new clause is intended to prevent avoidance of capital gains tax through the purchase of losses realised in trusts. We are introducing it now because it is only in the past six weeks or so that the Inland Revenue has gathered evidence of significant exploitation. When we announced the measure on 16 June, our assessment of the potential loss of revenue, if the schemes of which we had evidence were to succeed, was about &#163;500 million. Since then, further schemes have come to light, and the estimate has now risen to &#163;750 million. That is exploitation on a grand scale, and it is entirely unacceptable. We have made it clear that we shall take prompt action to stamp out <p> 
  
   
  
   
  
   5 Jul 1999 : Column 719  
  avoidance of this kind. That is why we are taking action now, and why we shall continue to take such action whenever the need arises.
  <p>Question put and agreed to. 
  <p>Clause read a Second time, and added to the Bill. 
  
   <p>Brought up, and read the First time. 
  <p>
   I beg to move, That the clause be read a Second time.
   
  
  <p> 
      Mr. Deputy Speaker:   
   With this, it will be convenient to discuss Government amendment No. 25.
   
  
  <p>Question put and agreed to .
  <p>Clause read a Second time, and added to the Bill .
   
  
   <p>
   
  (4A) For the purposes of subsection (4) above a relevant journey is any journey beginning in the United Kingdom and having an immediate destination outside the member States.
   
  
   
  (4B) In relation to goods treated as stores by virtue of subsection (4) above, any reference in the customs and excise Acts to the consumption of stores shall be construed as referring to the sale of the goods as mentioned in paragraph (a) of that subsection."
   
  
   
  (2) This section shall be deemed to have come into force on 1st July 1999 but shall not have effect in relation to any shipment of goods before that date.'.-- [Dawn  Primarolo.] 
  <p>Brought up, and read the First time. 
  
  <p>
   I beg to move, That the clause be read a Second time.
  <p> 
  
   As hon. Members will know, until last week, passengers on ferries, hovercraft and aircraft travelling within the European Union were able to buy duty-free goods, either on board or at duty-free shops at ports and airports. Within the EU, duty free came to an end on 30 June. All merchandise sold for take away must now be sold duty and tax paid. The new clause makes the necessary changes to the Customs and Excise Management Act 1979, bringing the Act's provisions into line with a decision taken unanimously, in 1991, by the previous Government and all other member states.
  <p> 
  
   Several statutory instruments preceded the new clause to give effect in UK legislation to the abolition of duty free. From 1 July, goods sold to the travelling public for them to take away at the end of journeys within the EU are subject to VAT at the rate applicable in the member state of departure. Excise goods, such as tobacco and alcohol products, are chargeable with duty at the rate of the member state of departure or of the country of destination--depending on where they are sold.
  <p> 
  
   The vast majority of journeys within the EU can benefit from the simplified procedures introduced by the Government, and from the concessions that we managed to extract from the Commission. In the few areas where the simplified arrangements cannot operate, discussions have been held with service providers to ensure the smooth introduction of the successor regime.
  <p> 
  
   The new regime is working smoothly, but the Government will keep the implementation of the scheme under review to ensure that--should further amendment be required--we can assist the trade and the travelling public. That includes the possibility of returning to the Commission to press for any changes that may become necessary.
  <p> 
  
   I commend the new clause to the House.
  <p> 
      Mr. Letwin:   
   I have already declared one potential interest in that a pet-food shop might be a client of my bank; I now declare another in case some airline or shipping company is also a client.
  <p>Question put and agreed to. 
  <p>Clause read a Second time, and added to the Bill. 
  <p>
   
  (i) was printed by or under the supervision of the photographer;
   
  
   
  (ii) is signed by him; and
   
  
   
  (iii) either is the only print made from the exposure in question or is comprised in a limited edition;
   
  
   
  (6A) The following do not fall within subsection (5) above by virtue of subsection (6)(a) above, that is to say--
   
  
   
  (a) any technical drawing, map or plan;
   
  
   
  (b) any picture comprised in a manufactured article that has been hand-decorated; or
   
  
   
  (c) anything in the nature of scenery, including a backcloth.
   
  
   
  (6B) An item comprised in a limited edition shall be taken to be so comprised for the purposes of subsection (6)(d) to (h) above only if--
   
  
   
  (a) in the case of sculpture casts--
   
  
   
  (i) the edition is limited so that the number produced from the same mould does not exceed eight; or
   
  
   
  (ii) the edition comprises a limited edition of nine or more casts made before 1st January 1989 which the Commissioners have directed should be treated, in the exceptional circumstances of the case, as a limited edition for the purposes of subsection (6)(d) above;
   
  
   
  (b) in the case of tapestries and hangings, the edition is limited so that the number produced from the same design does not exceed eight;
   
  
   
  (c) in the case of enamels on copper--
   
  
   
  (i) the edition is limited so that the number produced from the same design does not exceed eight; and
   
  
   
  (ii) each of the enamels in the edition is numbered and is signed as mentioned in subsection (6)(g)(ii) above;
   
  
   
  (d) in the case of photographs--
   
  
   
  (i) the edition is limited so that the number produced from the same exposure does not exceed thirty; and
   
  
   
  (ii) each of the prints in the edition is numbered and is signed as mentioned in subsection (6)(h)(ii) above.
   
  
   
  (6C) For the purposes of this section a collector's piece is of philatelic interest if--
   
  
   
  (a) it is a postage or revenue stamp, a postmark, a first-day cover or an item of pre-stamped stationery; and
   
  
   
  (b) it is franked or (if unfranked) it is not legal tender and is not intended for use as such.
   
  
   
  (6D) Subsection (4) above does not apply in the case of any goods imported from outside the member States if--
   
  
   
  (a) the whole of the VAT chargeable on their importation falls to be relieved by virtue of an order under section 37(1); or
   
  
   
  (b) they were exported from the United Kingdom during the period of twelve months ending with the date of their importation."
   
  
   
  (3) This section has effect in relation to goods imported at any time on or after the day on which this Act is passed.'.-- [Dawn  Primarolo.] 
  <p>Brought up, and read the First time. 
  
  <p>
   I beg to move, That the clause be read a Second time.
  <p> 
  
   The new clause enables the United Kingdom to fulfil its legal obligations under the seventh VAT directive, as incorporated in the EC sixth VAT directive. That directive requires member states to apply a minimum rate of VAT <p> 
  
   
  
   
  
   5 Jul 1999 : Column 739  
  of at least 5 per cent. to a wide range of imported works of art, antiques and collectors' pieces. The new clause implements the undertaking given by the previous Government to increase our rate to the minimum level.
  <p>Question put and agreed to. 
  <p>Clause read a Second time, and added to the Bill. 
  
   <p>Brought up, and read the First time. 
  
  <p>
   I beg to move, That the clause be read a Second time.
  <p> 
  
   
  
   
  
   5 Jul 1999 : Column 746  
  
  <p>Question put and agreed to. 
  <p>Clause read a Second time, and added to the Bill. 
  
   <p>Brought up, and read the First time. 
  
  <p>Question put,  That the clause be read a Second time:--
  <p>The House divided:  Ayes 149, Noes 316.
  