ACCOUNTING FOR TAX AND TIME FOR PAYMENT (Hansard, 20 April 1994)

§ Sir John Cope
I beg to move amendment No. 36, in page 35, line 14, leave out 'account for tax by making' and insert 'make'.
We now move to the insurance premium tax and to a point that is similar to what was covered in one of the amendments in the previous group. It covers the point about nil returns. As I said about the previous amendment, we believe that nil returns for a month or occasional periods could result in time being wasted not only by Customs and Excise in checking whether a return should have been submitted, but by the insurers involved who might receive requests from Customs and Excise and control visits to verify the reason for the absence of a return even though it would have been a nil return. It makes it clear that Customs and Excise regulations can require a nil return from an insurance company which in a particular period has nothing to return.

§ Mr. Alistair Darling (Edinburgh, Central)
I understand the Paymaster General's point. It is ironic that, although the Government claim that they want to reduce red tape imposed on industry, the requirement for a nil return will be expensive if only because companies have to check whether such a return is appropriate. Obviously, we do not oppose the amendment, but, as we said in Committee, the cost of collecting and implementing the tax will be substantial and the tax will have to be met by the people who pay the premiums—members of the public. The Government should not try to give the impression that the cost of implementing the tax will be minimal because it will be substantial. In time, it may bear quite heavily on the industry itself.

§ Sir John Cope
As I think the hon. Gentleman is aware, we have done our best to design the mechanics of the tax and its operation in such a way as to minimise the burdens as far as possible.
There is another aspect to the amendment which I should have mentioned earlier. Some insurers are likely to have accounting periods in which no tax is due, but some are likely to have occasional accounting periods in which their tax credit claimed in respect of refunded premiums exceeds their tax liabilities in that period. Without an amendment of this kind, they would be unable to claim the balance of the money due to them. That is a further recommendation for the amendment.