§ 6. Where there is a letting of accommodation only part of which is holiday accommodation, such apportionments shall be made for the purposes of this Schedule as appear to the inspector, or on appeal the Commissioners, to be just and reasonable.'.
§
Amendment (a) to proposed amendment No. 42, in paragraph 1(2), at end insert'—
`(k) section 73 of and Schedule 10 to the Finance Act 1976'
§ Mrs. Elaine Kellett-Bowman (Lancaster)I thank the Government for amendment No. 42, which relates to a point on which we have been pressing strongly. However, I should like them to accept amendment (a) to that amendment, which would extend capital transfer tax relief for business property to furnished holiday lettings. That would be extremely helpful for holiday letting owners and caravan site owners on the west coast as well as in the north-west, and I hope that the Minister will agree to that additional concession.
§ Sir Anthony Meyer (Clwyd, North-West)Like my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman), I wish to express my gratitude to Treasury Ministers for the trouble that they have taken by way of this series of amendments in making concessions to meet the genuine needs of those engaged in the holiday letting industry, which is of great importance to the tourist industry, particularly in the part of the country that I represent.
For me, what the Government have done represents two thirds of a loaf, though I appreciate that that is a great deal better than no bread at all. I would have preferred to see no stipulation that the premises must be let for any fixed period during the year. Any hotel keeper who, for reasons beyond his control, is unable to let accommodation for that period is liable to forfeit all concessions thereby. However, I recognise the enormous steps which have been taken to meet the genuine concerns that were expressed, and I am grateful for that
§ Mr. Stephen RossI welcome this series of amendments, which will have a considerable effect on my constituency. May please take it that they mean that holiday parks will in future be charged under case I, schedule D? I assume that they will, but I have received letters from leading chartered accountants stating that they are still not absolutely sure on the point. May we be reassured about that, because it is desperately important?
§ Mr. Norman Miscampbell (Blackpool, North)I, too, rise simply to say how grateful those who represent the holiday industry are for the concessions that have been made, following a number of interviews and approaches in the last six months.
I hope that the Government will bear in mind the problem that may arise by limiting this concession to the date of 1982. There may be cases which have not yet been settled but which arose before that date and which could give rise to considerable difficulties because of a misinterpretation over the years, as it now turns out, by the Inland Revenue
§ Mr. Maxwell-HyslopI wish to keep in the minds of my right hon. and hon. Friends the danger of any minimum period of letting. The practical effect is that the most attractive rooms will be let first and will first fulfil any minimum letting requirement. A minimum letting requirement can have the bizarre effect of closing up and not letting the better rooms so that the quota is met on the least attractive rooms. I am sure that that is not what the 1307 Government intend, but it is an issue that I raised at a meeting with my hon. Friend the Financial Secretary to the Treasury. It is not clear to me how the difficulty has been overcome. To use the description which I employed when I met my hon. Friend, I cannot believe that the room with the cracked loo and the spider in the plughole of the washbasin is the one that has to be offered to holiday visitors because the one that does not have a cracked loo and a spider has been let for the minimum qualifying period. I should like my right hon. and learned Friend's response to that specific question
§ Mr. John TownendI, too, am grateful to my right hon. and learned Friend the Chief Secretary to the Treasury for the concessions that have been made. They will help caravan park operators who offer the facility of caravans, but they will not help caravan operators who deal in pitches that are available for holiday or residential purposes. It is perturbing that some of these businesses that have been assessed under case 1 are finding that the Inland Revenue is holding up the settlement of the assessments and waiting until the Finance Bill has completed its passage through the House, when it intends to assess them under case 6.
It seems that the Government have conceded what many of us have been saying for many months about the holiday letting business. Many of us have been arguing that it is a trade and the Government have given it many of the allowances that are applicable to trade. I cannot understand why they have not gone the whole way and returned to assessing them under case 1. It seems that there has been heavy pressure from the Inland Revenue. I should be grateful if my right hon. and learned Friend would consider again the position of caravan site operators
§ Mr. Eldon GriffithsI would have preferred the Government to go the whole way and to define the caravan industry as a trade. However, we have achieved what matters, for a reduction in the minimum number of days will have a practical effect. I ask my right hon. and learned Friend, who has contributed so much to this achievement, whether he is able to accept amendment (a). If not, will he be good enough to write to those of us who are interested to explain his reasons for being unable to do so? I do not ask him to weary the House with his reasons at this stage.
§ Sir Peter Blaker (Blackpool, South)I add my thanks to the Government for the steps that they have taken. The issue that we are discussing has aroused enormous interest and produced one of the fattest piles of correspondence that I have received for many years. I pay tribute to the Blackpool association, which is one of the largest in the country, for the help that it gave in preparing amendments to be tabled in Committee.
I ask my right hon. and learned Friend to explain why he has not agreed to treat these trades, which is how I regard them, as eligible under case 1. However, I understand that he is giving them everything that case 1 would provide.
I reinforce the comment of my hon. and learned Friend the Member for Blackpool, North (Mr. Miscampbell), which is exemplified by one of my constituents who sold his newsagent's business in 1979. He bought some holiday flats in 1981 with the best advice from his accountants on 1308 the law as it was then understood. The attitude of the Inland Revenue now is that he must pay capital gains tax and is not eligible for roll-over relief. It would be unconscionable if the Inland Revenue were to press that case, and I ask for an assurance from my right hon. and learned Friend that cases arising before April 1982 will be treated sympathetically and fairly
§ Mr. David Maclean (Penrith and The Border)I agree with everything that has been said by my hon. Friends on this issue. There are many holiday park operators in my constituency and they are concerned that my right hon. and learned Friend has not gone the whole hog and treated caravan site operators as operating within a trade. They provide substantial services and it is important that they are given the treatment that the Inland Revenue would normally give a trade under its terminology. I hope that my hon. Friend will address himself to this issue
§ Mr. John Butterfill (Bournemouth, West)I thank my right hon. and learned Friend for his courtesy in looking at this subject over a number of months. Will he clarify the position under clause 49 whereby, for example, 11 flats in a block of 12 flats are let for the minimum prescribed period, but one flat remains unlet because of the need to carry out works of substantial refurbishment? What will be the position of the owner or occupier of that one flat? An answer to that question would be most helpful to me and my constituents.
§ 11 am
§ Mr. Peter ReesI very much appreciate my hon. Friends' kind words. It is rare that during the debate on the Finance Bill one receives such gratitude, so I am suitably appreciative.
My hon. Friends the Members for Lancaster (Mrs. Kellett-Bowman) and for Bury St. Edmunds (Mr. Griffiths) made similar points about capital transfer tax. The whole problem was triggered by income tax—it had nothing to do with capital transfer tax. Although I accept that there may be a case—I do not go further than that —for giving capital transfer tax relief for such lettings, that would take the debate into a new area. I hope that both my hon. Friends will accept that there is no case to be made or time for that to be done, at least this year. Perhaps the measure will be considered without any commitment, but that would be a new departure. My hon. and learned Friend the Member for Blackpool, North (Mr. Miscampbell) and my right hon. Friend the Member for Blackpool, South (Sir P. Blaker) have shown a long and continuing interest in this problem, and I cheerfully pay tribute to them.
The House will appreciate that the relief is being made retrospective in any event. To push the date back before 1982 would not only cause considerable administrative difficulties for Inland Revenue but would appear to be unfair to those proprietors who have already let out on the basis of the law as it stands. That would happen unless I were to undertake—I cannot conscientously do so—to have their already closed assessments reopened. I hope that the House will feel that taking the date back to 1982 will do justice—perhaps it will not be total justice—to a substantial part of the case advanced by my right hon. Friend the Member for Blackpool, South and my hon. and learned Friend the Member for Blackpool, North.
My hon. and learned Friend the Member for Blackpool, North and one or two other hon. Members asked why we 1309 did not totally assimilate case I of schedule D. On examining the legislation, my hon. Friends will note that we have given for individuals all the reliefs that would have been available had those operations been assessable under case I of schedule D.
There is, however, one technical point, which I am sure my hon. Friends will appreciate. Under case I of schedule D, the commencement and cessation provisions would apply. Those provisions, would be extremely difficlt to operate in practice, because in one year a letting might be made within the terms of the clause and in another year it might not. Practically all the reliefs for which my hon. Friends, who are rightly concernd for these cases, have pressed, have been conceded not only in the original clause as drafted but in the amendments.
My hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) was worried about repairs and redecorations.
§ Mr. Maxwell-HyslopThe minimum period
§ Mr. ReesMy hon. Friend will realise that the Government have reduced the minimum period. If we reduce it still further—bearing in mind the fact that we have now jettisoned this seasonal test — a range of lettings might qualify. I am sure that the whole House will agree that they are not intended to be brought within the ambit of the measure. Lettings unconnected with holidays might qualify.
As I understand the thrust of all the representations made in Standing Committee and on Report, we wish to clarify the position only for genuine holiday lets. I am sure that my hon. Friend the Member for Tiverton recognises that if we were to reduce or dispense with the minimum period, furnished flats in, for example, London—in the normal course of events, they are not let to tourists—might qualify. I do not believe that that is the intention of the House. Therefore, I hope that, on reflection, my hon. Friend will feel that justice is being done in this case, particularly as we have reduced the minimum period to 70 days.
My hon. Friend the Member for Bournemouth, West (Mr. Butterfill) made a cogent point, which I fully appreciate, but I hope that he will feel that justice is being done through the averaging provisions that he will find in the Government amendments. I hope that they will take care of that case.
This point has exercised the minds not only of the hon. Member for Isle of Wight (Mr. Ross) and my hon. Friend the Member for Penrith and The Border (Mr. Maclean) but of others inside and outside the House. It concerns caravan sites. The provisions give caravan site proprietors an extra option. If they can bring themselves within the provisions —in principle there is no reason why they should not—they will be able to take advantage of the reliefs in precisely the same way as proprietors of fixed holiday houses. That still does not shut them out, on normal general principles, from claiming case I of schedule D treatment. It would be inappropriate for me to try to be specific. In one part of the spectrum, we have the letting of a pitch in an ordinary field with no facilities or services.
The two cases that have triggered off the debate will come under not case I of schedule D but case I of schedule A. On the other hand, if there were a range of services and facilities independent of the new reliefs, I suspect that the site proprietor would be able to claim treatment under case 1310 I of schedule D. That will be an added bonus. It is not designed to shut people out from claiming case I treatment on general legal principles
§ Mr. Robert Adley (Christchurch)I should like to make a small point. My right hon. and learned Friend is aware that many of those who run such sites have thoroughly legitimate worthwhile businesses providing employment for many people in constituencies such as mine. It would be helpful if my right hon. and learned Friend could say a word of commendation to those people, saying that he accepts that they do not need to prove their virility as business men, but are worthy members of society
§ Mr. ReesIf it will assuage those people's anxieties and those of my hon. Friend, who is concerned about their interests, I shall say that that is well known in tourism. Nothing that I have said is meant to commend in moral or any other terms those who may fall within or outwith the provisions. If it gives pleasure—I am always flattered if any words of mine give pleasure—I should like to say that I am sure that the majority of those people make a worthwhile contribution to the tourist industry, which is an important element of our economy. On that basis, I commend the amendment to the House.
§ Amendment agreed to.
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Amendments made: No. 40, in page 38, line 12, at end insert—
'(6A) Where, in any year of assessment or accounting period, a person lets furnished accommodation which is treated as holiday accommodation for the purposes of this section in that year or period ("the qualifying accommodation"), he may make a claim under this subsection, within two years after that year or period, for averaging treatment to apply for that year or period to that and any other accommodation specified in the claim which was let by him as furnished accommodation during that year or period and would fall to be treated as holiday accommodation in that year or period if paragraph (b) of subsection (3) were satisfied in relation to it.
(6B) Where a claim is made under subsection (6A) above in respect of any year of assessment or accounting period, any such other accommodation shall he treated as being holiday accommodation in that year or period if the number of days for which the qualifying accommodation and any other such accommodation was let by the claimant as mentioned in paragraph (a) of subsection (3) above during the year or period amounts on average to at least 70.
(6C) Qualifying accommodation may not be specified in more than one claim in respect of any one year of assessment or accounting period.' .
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No. 41, in page 38, line 16, at end insert—
'(8) This section has effect—