Diolch, Llywydd. The Finance Committee spent quite a significant period of time considering the issue of land partly situated in Wales and partly situated in England. Earlier in proceedings, we understood that there were 40 or so such properties that straddled the border, but as proceedings went on, that number was revised up and up, and we now understand that it is in excess of 1,000. The issue we have before us is that splitting a transaction that straddles the border will, on average, lead to purchasers paying less tax, because with a progressive tax where the rate increases as the amount of land value increases, if you split that land value into two, the average tax rate you pay will be less.

There are also really significant administrative hurdles in this. We’re telling taxpayers to make a just and reasonable apportionment of the consideration for what they must treat as two transactions. The way in which they can do that is open to great argument and potential challenge. So, there’s a risk that the taxpayer may structure in it a way to avoid tax where possible, but also just a large administrative burden on the purchaser of land, and potentially the vendor to the extent that there needs to be any negotiation, and on their professional advisers. It’s not clear what the upside of this is to the extent that properties straddle the border. The law of averages is such that one can expect, on average, the amount of land in England and Wales from all the transactions that might happen in one year to be pretty similar. So, requiring people to split those and pay tax on a just and reasonable basis, and to work it out and justify it, to keep records and be willing to deal with the challenge that might happen later is a lot of work for no obvious gain.

The UK law that we have to deal with and respect in this sense is that the transaction is to be treated as if it were two transactions—one relating to land in Wales, the Welsh transaction, and the other relating to the land in England, the English transaction. And then the consideration for the transaction is to be apportioned between those two transactions on a just and reasonable basis. But there’s nothing to stop this Assembly deeming what a just and reasonable basis might be, and a lot of the reason why taxpayers and their advisers would welcome that happening is because it would reduce the work significantly and scope for legal challenge for them.

I propose two amendments to tackle that: the first is amendment 35, the lead amendment of this group. I happily accept that there are competence arguments around this amendment. What I have sought to do is to make it at least arguable that the legislation we would pass, if the amendment were accepted, is consistent with the UK legislation. The reason for that is that, overall, the apportionment would be done on a just and reasonable basis. If each one of those transactions, the taxpayer processed a nil transaction in respect of stamp duty land tax for land on the English border, and paid the whole price of the transaction in land transaction tax to the Welsh Revenue Authority, (a) that would minimise avoidance of tax through there being a lower average rate, so it would increase the yield and keep the yield where it would otherwise be for the public sector, and the Welsh Revenue Authority could simply transfer half of the cost of the money that’s been raised through the tax to Her Majesty’s Revenue and Customs so that they would settle up at the end of the year, so that overall it would be done on a just and reasonable basis, which I submit is arguably consistent with the UK legislating, although I admit there are challenges with respect to competence.

My second amendment is amendment 36, and on this we as an Assembly would deem just and reasonable apportionment to constitute either a 50/50 split, so the taxpayer doesn’t have to worry about how much land or building is in one particular place or the other, or, alternatively, we simply deem that the land area of the title, whatever that is according to the map that we’re expecting the Land Registry to develop—whatever proportion is in Wales, whatever proportion is in England of the land area of the title—that should be the just and reasonable apportionment. I think, if we give that option to the taxpayer, it would be a much simpler and easier process for the taxpayer, while protecting the revenues that would accrue to this Assembly from LTT.