§ Mr. PriskI beg to move amendment No. 16, in clause 283, page 237, line 16, leave out
'the land consists entirely of residential property and'.
§ The Temporary Chairman (Sir Nicholas Winterton)With this it will be convenient to discuss amendment No. 15, in clause 283, page 237, line 18, leave out '£1,000' and insert '£15,000'.
§ Mr. PriskAmendment No. 16 would remove the restriction in clause 283(2)(b)(b) and narrow the application of the new notification procedures to residential property. On the whole, and despite our previous discussions, the clause is welcome in that it seeks to reduce compliance costs and the burden by relaxing the notification procedures for the taxpayer. Despite our reservations about previous elements of the legislation, in this instance the clause will probably help the taxpayer and, indeed, the tax collector. Under current drafting, however, the land must consist "entirely of residential property". That seems somewhat illogical, I suspect that it may prove self-defeating and there is a danger that it could prove impractical. Let me run through those points briefly.
I believe that the measure could be illogical because, if the purpose is to cut the compliance burden, why apply the matter of the kind of use—the type of property use—in this instance? I believe that it could be self-defeating, because if the Revenue hopes to reduce its administrative costs, would it not be wiser to include all kinds of property? What is the relevance of the type of property? Doing so could be impractical because the clause relies in part on a definition under section 116 of residential property. I have to say th a that is not one of the clearest elements. Let me cite one example that relates to that.
Under current drafting, it is necessary to distinguish between two transactions under which a householder's garden was expanded—on the one hand, where the land forms part of a neighbour's garden, when the provision will apply, and, on the other, where the land is part of a field in an adjoining farm, when it will not. I am grateful to Mr. Jeremy de Souza of White and Bowker for highlighting that instance. He is one of several people to have done so. Does the Minister recognise that that is a potentially needless restraint on the clause? In the interests of compliance, will she accept our amendment?
May I now move amendment No 15?
§ The Temporary ChairmanOrder. The hon. Gentleman may speak to that amendment. He does not need to move it, as amendment No. 16 has been moved and we are considering amendment No. 15 with it.
§ Mr. PriskI am extremely grateful to you for that clarification and assistance, Sir Nicholas. I must confess that after four joyous hours of strip stamp debates in Committee yesterday and about three hours spent on related subjects, my recollection of the details is beginning to diminish.
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Amendment No. 15 refers to another restriction of £1,000 for those transactions that do not require the stamp duty land tax land transaction return No. 1. That is the rather infamous 12-page special that miraculously seems to be meant to simplify matters.
As I said, the purpose of clause 283 is welcome—it seeks to provide more relaxed notification procedures—but the maximum value of £1,000 seems to negate the purpose. Our amendment adjusts that to a more realistic figure: £5,000. At £1,000, few if any transactions will be helped. At £5,000, we suspect that both taxpayers and tax authorities would, if nothing else, benefit administratively. At £1,000, it is unclear whom the Financial Secretary is trying to help. Perhaps she will tell us how many transactions would be exempted at £1,000, and for that matter, how many might be helped at £5,000. When linked to the residential condition, the clause is further weakened, so the relationship between the two is important.
Amendment No. 15 is a probing amendment, and I hope that the Financial Secretary will respond accordingly. If she cannot agree to the proposed figure£5,000 may be inappropriate, and £3,000 may be more appropriate—I am open to positive suggestions from her, and I hope that she can propose a figure that will better reflect the realities of the property market.
§ Mr. RedwoodI support these two excellent, modest amendments, which would represent a small win for those of us who would like to simplify the situation for some people and reduce the burdensome compliance costs of this legislation.
My hon. Friend the Member for Hertford and Stortford (Mr. Prisk) is right—I doubt whether there will be many transactions of less than £1,000 in this inflationary property environment that the Government have created and are creating. There will be more transactions at under £5,000, and for that reason I welcome amendment No 16. I also welcome the idea in amendment No. 15 that the provision should be widened from applying just to residential property.
In the previous truncated debate, the Financial Secretary answered few of the points—obviously, she truncated it because she had no answers. The one answer that she did attempt, however, was on the issue of the compliance burden, which we are now debating. She confirmed what my hon. Friend well knows—that a 12-page form must be filled in to comply with the tax. Her defence was extraordinary. She said that most people who have leases need not worry, because they will not have to fill in the form themselves, as it will of course be filled in by their lawyer.
The Financial Secretary went on to say, knowing rightly that many lawyers are talented, hard-working, fast-moving, alert people, that they would soon get into the swing of things and realise that having to deal with another 12-page form was not too difficult, and that they might even be able to skip the odd page if they were lucky—or unlucky, depending on their point of view—with their transaction. What she should also know about lawyers is that, in my experience, they charge for such things. Most lawyers would see the provision as another good little bit of business. As my hon. Friend said, I am sure that a reputable provincial firm of 939 solicitors might put another £50 on the bill for filling in a 12-page form, whereas top London lawyers, being so much more talented and even more imaginative with their bills, might come up with an even higher figure. Therefore, of course there is a compliance burden on the person trying to take on a trading property, or whatever, because they would have to employ a lawyer, whose bill they would have to pay.
I hope that the Financial Secretary will apologise to the Committee for her odd view that because one can employ an agent to do something, that is not a burden, someone's time is not involved, and that time will not be billed for. Anything that she can do at this 11th hour, on this sorry piece of legislation, to make it a little cheaper and easier for people trying to go about their small business duties, and needing property to do so, would be welcome.
My hon. Friend has been remarkably modest in his demands. If I had been drafting the amendment, I would have put on a bigger figure than he proposes, but it gives me great pleasure to support his modest request. If the Minister is so heartless that she even turns that down, we shall have further confirmation that this Government do not give a toss about small business, and do not understand how damaging these interventions and costly devices in the property marketplace will prove to be. It will demonstrate that the Government's only interest is in grabbing as much money as possible from the business community and from people as they go about their normal business.
I have declared my interests in the register, but today I speak on behalf of all small business people and all those embarking on property transactions. I say, "Enough is enough. This is rip-off government. The money is being wasted. Give us a break."
§ Mr. David Laws (Yeovil) (LD)We on the Liberal Democrat Benches also understand what the Government are trying to achieve in clause 283. A reduction in the compliance burden would obviously be welcome, but we support the amendments because we feel that the reduction is pretty modest. I agree with the right hon. Member for Wokingham (Mr. Redwood) that the hon. Member for Hertford and Stortford (Mr. Prisk) has been quite modest and moderate, particularly in amendment No. 15, in proposing an alternative threshold within which there will be no requirement for an SDLT return.
Many would consider that even the Government concession is modest. Some would call it pitiful, and indeed some have done so. Transactions of less than £60,000 on a residential basis and of less than £150,000 on a commercial basis will still need to be reported, although there will be a zero tax return. The information required in the self-assessment return places a considerable burden of compliance on taxpayers and their advisers, and the tax itself represents a significant shift in the costs of compliance from the Revenue to the advisers. That needs to be rectified.
I hope that this proves to be one of the occasions that the Minister can make us consider worth while, by taking account of the concerns that have been expressed. If she does not accept the amendments, I 940 hope that she will think about returning at some stage with a slightly more generous provision of her own, so that she can declare that the Government planned it all along and are not making a concession to the Opposition. We ourselves would be generous and welcome that.
§ Ruth KellyI am always heartened when I hear the right hon. Member for Wokingham (Mr. Redwood) say that he has a small win on his hands.
I believe that this is a deregulatory measure. I urge Members to cast their minds back to the days when every transaction had to be notified. We are now proposing that some need not go through the process, in response to a specific representation about people who are generally unrepresented.
§ Mr. LawsHow many entities does the Minister believe will be exempt as a consequence of the Government's concession?
§ Ruth KellyI am, not sure that it is possible to put a figure on it, but I do not think there will be many. I will outline the sorts of people who will fall into the category.
The relaxation of the notification requirements is intended to help purchasers in the case of small residential transactions. The example given to us is that of the purchase by a tenant with a long leasehold of his or her own freehold. It will allow registration of the transaction at land registries by completion of a simple self-certification form rather than the submission of a stamp duty land tax form. Purchasers who are likely to benefit from the provision are often unrepresented, and representations are being made on their behalf. In cases seen by the Inland Revenue, £1,000 is sufficient to exempt them. Land registries have agreed to the concession because it does not impose an unnecessary burden on them.
In certain circumstances, a large company will buy a leasehold and sell it back to individual tenants for a few hundred pounds. They are unrepresented: they do not employ a solicitor to conduct the transaction. It is in the light of that that we have made the concession.
Amendment No 15 would raise the limit to £5,000. That is unnecessary to deal with the specific situation that I have outlined. I think that we have different policy intentions. The Government's policy intention is to relieve that category of people£
§ Mr. LawsI can understand the specific concern that has caused the Financial Secretary to introduce clause 283, but what is her argument against amendment No. 15? Is it a cost argument, or does she believe that it will complicate the administrative job of the Government? What is the argument against that modest amendment?
§ Ruth KellyThe argument against an increase in the limit is basically the difficulty that it would cause for land registries, which would have to decide whether a self-certificate is appropriate, or whether a full Inland Revenue certificate should be issued on each occasion. They have suggested to us that a £1,000 limit would be acceptable to them, but that the risk is that the burden would increase were that limit to increase.
§ Mr. PriskI may have missed a point but I am unclear as to why, in issuing a certificate, there is a difficulty in distinguishing between £1,000 and £5,000. I am not quite clear. Can the Financial Secretary expand on that? It seems hazy.
§ Ruth KellyThe fact is that a lot fewer transactions will be covered with a £1,000 limit, which is appropriate to exempt the transactions that we are concerned with in this case. Clearly, we will keep that limit under review. If representations are made in due course, we may consider whether it is still appropriate, but I am convinced that it is.
§ Mr. PriskI think that the Financial Secretary is saying not that it is difficult to distinguish between the two categories, but that a much greater number of cases will be applicable under the £5,000 limit, and that it is the administrative burden for the Land Registry that we are talking about. Will she confirm that?
§ Ruth KellyAs far as I understand it, the land registries are telling us that it would put a much greater burden on them if the limit were increased, because the scope of the exemption would greatly increase. We think that a £1,000 limit is appropriate for the policy aim of excluding that particular category of unrepresented person, although, as I say, if different situations are put to us, we will consider them in due course, always with the aim of improving the Bill as and when we can. However, there is a case that that group of people, who are unrepresented, should not have to fill in the full stamp duty land tax form, of which I know the hon. Gentleman is a great fan. For that reason, I ask the Committee to reject both amendments.
§ Mr. PriskI am unconvinced on the question of the number. It seems entirely acceptable to apply the ridiculous compliance burdens under schedule 37 of a six-step, three-formula, two-page application in respect of abnormal rents, but when the Land Registry is asked to distinguish between a £1,000 set of certificates and an owner who will perhaps try £5,000, it is insurmountable. It is a peculiar argument.
It is a disappointment that the Government's arguments are remarkably weak. That is unusual. Usually, the Financial Secretary is far more robust and persuasive. On these two amendments, she has not been.
My purpose in tabling the amendments was to put on record the genuine worry of those in the real world whom we are here to represent. I have done that. It is important that we continue to do that. However, on balance, I shall withdraw amendment No. 16. I believe that you will wish me, Sir Nicholas, formally to present amendment No. 15 in due course.
§ The Temporary ChairmanThe hon. Gentleman is seeking leave to withdraw amendment No. 16.
§ The Temporary ChairmanDoes the hon. Gentleman wish to press amendment No. 15?
§ Mr. PriskI think that this is an example of that awkward situation where I need formally to present an 942 amendment, only in due course to have to withdraw it. We have debated the whole issue. The amendments are interrelated; therefore, I would wish, having formally presented the amendment, formally to withdraw it.
§ The Temporary ChairmanI am extremely grateful to the hon. Gentleman, who has saved me the trouble of explaining that to the Committee.
§ Clause 283 ordered to stand part of the Bill.