TNAG-1361-FCO40-1807-Hong-Kong-Hansard-reports-and-minutes-of-the-meetings-of-the-1985 — Page 252

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It is also a fact that under the present system those who gain by using deferral devices are merely passing part of their tax burden onto other taxpayers and in all equity this

must be stopped.

At present the Commissioner has the power to permit holdovers without any conditions, and the statistics support his claim that he readily does so when it is immediately apparent that a taxpayer's objection has merit. Under the Administration's proposals he would continue to have that option or to permit holdovers backed by the purchase of Tax Reserve Certificates. This 'black' or 'white' situation was felt by the Ad Hoc Group to be too inflexible. The agreed amendments revise the options and add flexibility by firstly giving the Commissioner the option to allow holdover without the purchase of Tax Reserve Certificates with a proviso that in the event of an unsuccessful objection or appeal the taxpayer must pay interest on the amount involved. An amendment to Clause 2 inserting an appropriately worded new paragraph (10)

achieves this objective.

The agreed amendments secondly give the Commissioner the option to permit the taxpayer to provide a bank guarantee in lieu of Tax Reserve Certificates provided that the guarantee covers the amount of tax held over plus interest until payment is made in the event the objection or appeal is disallowed. The other amendments to Clause 2 reflect this arrangement.

To avoid any confusion as to the circumstances in which the Commissioner will exercise his discretion to make an

unconditional holdover order, with interest payable if the objection or appeal is ultimately unsuccessful, or an order conditional upon the purchase of Tax Reserve Certificates or the provision of a bank guarantee, the Commissioner has undertaken to issue an amended Departmental Practice Note laying down clear policy guidelines applicable to each case.