Lord Leigh of Hurley (Con)

My Lords, it is an honour to follow the noble Baroness, Lady Fairhead. I also speak as a member of the Finance Bill Sub-Committee of the Economic Affairs Committee—a lot of words on a business card. It was a delight to serve on it again, and I congratulate our chairman, the noble Lord, Lord Liddle, on his excellent work, and thank the staff and colleagues on the timely production of this report. Sadly, we will not be able to debate the report separately, so I hope the Minister finds some time to comment on some of our proposals today. We were very troubled by the reforms to inheritance tax. We can see that the burden that will be placed on personal representatives, as the noble Baroness, Lady Fairhead, set out—I agree with every word she said—will risk dissuading anyone from accepting this role. I know that I would be extremely reluctant to accept a job as a personal representative, which I have accepted in the past. Taxing pensions with IHT is a retrospective tax because people like me—I declare an interest—have saved money into a pension on the understanding that it would be outside my estate. The Government have reneged on that deal, and it is clear from the Bill that they are there only to support those on defined benefit schemes, which is possibly of benefit to those who drafted the Bill and all public sector employees, not those of us earning and saving from our own resources, who have been hammered by the Bill. The Government have clearly not thought through the complexity of the interaction of BPR, APR and IHT on pensions. As a result, many small family businesses and farmers will face acute liquidity problems on the death of a family member in their business. We argued strongly for the Government to extend the deadline for payment from six to 12 months. That was not a big ask, so I urge the Minister to look at this again. I will raise one issue that I hope the Minister will not think is political. It has not been discussed elsewhere and it will be a major problem. The proposed introduction of inheritance tax on unused DC pension funds on death will affect a disproportionately female demographic, particularly widows, single older women, lone parents, unpaid carers, disabled older women, early-death survivors and personal representatives. I know that there was an equality statement, but that was based solely on HMRC data, not ONS data. I have had a look at the ONS data and it is clear that there will be a massive impact on older women from this. Women typically live longer than men, and they will suffer as a result of these changes. I am sure that is not the Government’s intent, but that is the effect. The Government have not published any demographic modelling, so we are unaware of the resultant effect. This is a really serious issue that, from today, will gather momentum in the national press as people realise that this effect will hammer widows and women who have to be personal representatives themselves. Can the Minister also look at the basis of valuation for businesses for IHT and BPR on the owner’s death? It is a bit absurd but, currently, HMRC looks at the value of a business the day before the death. This is completely unfair, because the value of many businesses is dependent on the owner working in that business. It is shocking that HMRC will not accept that, following the demise of a significant shareholder, that business might be worth considerably less, or even nothing. Dependants will have to pay inheritance tax based on the owner still being alive, which is absurd. I turn to other matters. Many have concerns about tax adviser registration. The CBI, in particular, thinks this will have a chilling effect on access to advice for retail and business clients from, for example, conveyancers and pension providers. We still do not have clarity on the treatment of in-house tax teams, which is critical. The avoidance legislation in Part 6 and the tax adviser legislation in Part 7 of the Bill is overbroad; it risks capturing legitimate tax advisers who are acting reasonably and deterring them from acting in areas of uncertainty, but not attacking tax advisers based offshore. The best solution for both the promoter and tax adviser registration rules would be to delay enactment by a year to allow HMRC to iron out concerns with professional bodies and businesses. There is no loss of tax by doing this; it would allow the further tweaks needed to be made to the legislation. To the surprise of many in this House, I thank the Minister for the changes to the EIS and VCT restrictions. Of course, I regret the VCT relief reduction from 30% to 20%. By the way, the last time investment limits were cut by 10 percentage points—from 40% to 30% in 2006-07—the VCT funds raised dropped from £780 million to £270 million, a reduction of over 65%. Who knows what will happen this time round? I am sure the Minister recalls me banging on to get through more changes on, for example, limits, company age, relationship restrictions in families and so on. I hope that the Government look at this again. Who other than parents will be mad enough to back a young person, so why should they not get the same tax relief? It is intensely frustrating to many of us that we have only seven minutes to comment on the 500 pages of the Bill. There is an enormous reservoir of knowledge in this House, which has many more businesspeople and advisers than the other place, so it would be great to be invited to a round table sometime to throw out some real-world issues and solutions, as we see them. In closing, I bid a very fond farewell to the 22nd Baron, the noble Lord, Lord St John of Bletso. I looked it up and the title was not created at the Norman Conquest, but I know that his ancestors came over then, so his family have served this country well and we are grateful. He personifies the huge loss of skill and knowledge that we will suffer with the departure of the hereditaries.