Trusts relating to divorce, life protection policies..
During a House of Commons debate on the Finance Bill, Brooks Newmark seeks clarification on several points in relation to trusts set up for people who are unable to cope with owning assets, specifically in relation to the definition of disability.
Mr. Newmark: I will try to be brief and, rather than rehashing the points that we made in Committee, I merely wish to seek clarification from the Paymaster General on several points that she made, particularly with respect to amendment No. 5. In Committee, she admitted:
"For people who find it difficult or impossible to cope with the demands of owning assets outright, a trust will often be the most practical way for substantial assets to be held."
However, what about people who find it difficult or impossible to cope with the demand of owning assets because of drugs, alcohol or gambling-the very point raised by my hon. Friend the Member for Chipping Barnet (Mrs. Villiers)?
The Paymaster General made three technical and non-substantive objections to amendment No. 5, which deals with the definition of disability-a point madeby my hon. Friend the Member for South-West Hertfordshire (Mr. Gauke). The first was that the new definition would conflict with trusts already in existence. The second was that the Mental Capacity Act 2005 is not yet in force. The third was that it applies only to England and Wales. Can the Paymaster General confirm whether she objects to the wider definition of vulnerability itself, or is she merely shying away from the technical difficulties?
The Paymaster General said:
"While I sympathise with the desire to keep the tax code up to date with developments in non-tax legislation, I do not consider that those particular changes would really improve matters."
Is she acknowledging that matters need improving? If so, how does the legislation improve the situation faced by vulnerable people?
The Paymaster General further said:
"I can see the desired effect of the changes proposed by the hon. Member for Chipping Barnet, the route she suggests would be a difficult one to take at this point."-[ Official Report, Standing Committee A, 13 June 2006; c. 613-15.]
If the Paymaster General can see the desired effect, why can she not see another route? I look forward to her response to those questions.
Rob Marris: I am prompted to make some brief remarks by the many remarks made by Opposition Members. First, I reject the calumny that the Opposition have projected on to Labour Members that, somehow, we are not aware that trusts are often used for non-tax avoidance purposes. We are aware of that and I say that as someone who was a practising solicitor and who, on occasion, drew up trusts--although not for many years--and they were not for tax avoidance purposes. Many Labour Members recognise that, and I will not be tarred with the brush of being some kind of class warrior on this issue.
Correspondingly, it behoves Opposition Members to recognise more forcefully than many of them have done in Committee and today that, on occasion, trusts are used for tax avoidance and that, from our perspective, trusts are abused in that way. It is understandable that individuals will try to minimise their tax bills in any tax regime. It is also understandable that a Government, particularly a Labour Government, will occasionally seek to clamp down on that. That is part of what schedule 20, which is the principal point now under debate, attempted to do.
Mr. Newmark: I totally understand what the hon. Gentleman has said. In the same way that we should, and do, acknowledge some of the points that he raised-there are people who try to abuse the system through trusts-I ask Labour Members to acknowledge many of the valuable points that the Opposition have made, particularly with respect to the definition of disability, which at this stage is vague and woolly. We are simply trying to tighten things up on some of those points.