Consideration of Bill, as amended in the Committee and the Public Bill Committee
New Clause 1
Freeport tax site reliefs: provision about regulations
Schedule (Freeport tax site reliefs: provision about regulations) makes provision about powers to vary the circumstances in which certain reliefs are available in relation to freeports.—(Lucy Frazer.)
This new clause and NS1 make provision about powers to make regulations in relation to the circumstances in which certain reliefs are available in relation to freeports.
Brought up, and read the First time.
16:40
Lucy Frazer Portrait The Financial Secretary to the Treasury (Lucy Frazer)
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I beg to move, That the clause be read a Second time.

Eleanor Laing Portrait Madam Deputy Speaker (Dame Eleanor Laing)
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With this it will be convenient to discuss the following:

Government new clause 3—Public interest business protection tax.

New clause 2—Review of impact of section 25 (Tonnage tax)

‘(1) The Chancellor must review the impact of the changes made by section 25 of this Act (Tonnage tax), and lay a report of that review before the House of Commons, within 12 months of that section coming into force.

(2) The review carried out under subsection (1) must include assessment of the impact of the provisions of that section on—

(a) the training of UK—

(i) cadets and

(ii) ratings, and

(b) the employment of UK—

(i) cadets and

(ii) ratings

by operators of qualifying ships.

(3) The review carried out under subsection (1) must include assessment of the effect of changes to flagging arrangements made by subsections 25(6) and (7).’

This new clause would require the Government to report to the House on the impact of the provisions of clause 25 on the training and employment of UK seafarers.

New clause 4—Reviews of Economic crime (anti-money laundering) levy

‘(1) The Government must publish a review of the operation of the Economic Crime (Anti-Money Laundering) Levy by 31 December 2027.

(2) The Government must publish on 31 December each year until the establishment of a register of beneficial owners of overseas entities that own UK property—

(a) an assessment of the contribution to the effectiveness of the Levy that such a register would make; and

(b) an update on progress toward implementing such a register.’

This new clause would put into law the Government’s commitment to undertake a review of the Levy by the end of 2027, and require them to publish an assessment every year until a register of beneficial owners of overseas entities that own UK property is in place an assessment of what impact such a register would have on the effectiveness of the Levy, and progress toward the register being established.

New clause 5—Review of the impact of the extension of temporary increase in annual investment allowance

‘The Chancellor of the Exchequer must, within three months of the end of tax year 2022-23, publish a review of decisions by companies to invest in the UK in 2022-23, which must report on which companies, broken down by size, sector, and country of ownership, have benefited from the annual investment allowance; and this assessment must also assess the merits of the existence of the superdeduction in light of the AIA.’

This new clause would require a review of which companies have benefited from the Annual Investment Allowance in 2022-23, broken down by size, sector, and country of ownership, and an assessment of the merits of the superdeduction in light of the AIA.

New clause 6—Review of the impact of this Act

‘(1) The Government must publish a review of the measures in this Act within three months of its passing.

(2) The review in subsection (1) must consider how the measures in this Act will affect—

(a) the amount of tax working people will be paying in 2022/23;

(b) household finances in 2022/23;

(c) the rate at which the economy will be growing in 2022/23.’

This review would require the Government to review what impact measures in this Act are having in 2022/23 on the amount of tax working people will be paying, household finances, and economic growth.

New clause 7—Equality Impact Analyses of Provisions of this Act

‘(1) The Chancellor of the Exchequer must review the equality impact of the provisions of this Act in accordance with this section and lay a report of that review before the House of Commons within six months of the passing of this Act.

(2) A review under this section must consider the impact of those provisions on—

(a) households at different levels of income,

(b) people with protected characteristics (within the meaning of the Equality Act 2010),

(c) the Government’s compliance with the public sector equality duty under section 149 of the Equality Act 2010, and

(d) equality in different parts of the United Kingdom and different regions of England.

(3) A review under this section must include a separate analysis of each separate measure in the Act, and must also consider the cumulative impact of the Act as a whole.’

New clause 8—Government review of operation of Economic crime (anti-money laundering) levy

‘(1) The Treasury must conduct a review of the Economic crime (anti-money laundering) levy.

(2) The review must consider the impact on the effectiveness of the levy that would be made by the following measures—

(a) the establishment of a register of overseas entities as proposed in the draft Registration of Overseas Entities Bill that was laid before Parliament on 23 July 2018; and

(b) proposals for corporate transparency and reform of the companies register announced in a Ministerial Statement to Parliament on 21 September 2020.

(3) The review must be published and laid before Parliament within two years of the levy coming into operation.’

This new clause would require the Treasury to conduct a review of the economic crime (anti-money laundering levy). In particular, the review would need to consider how the introduction of corporate transparency measures previously announced by the Government would affect the levy’s operation.

New clause 9—Assessment of annual investment allowance

(a) how much the changes to the annual investment allowance under section 12 of this Act will affect GDP in the event of the Finance Act coming into effect, and

(b) how the same changes would have affected GDP had the UK—

(i) remained in the European Union, and

(ii) left the European Union without a Future Trade and Investment Partnership.’

This new clause would require an assessment of the effects of the provisions in clause 12 on GDP in different scenarios.

New Clause 10—Review of temporary increase in annual investment allowance

The Government must publish within 12 months of this Act coming into effect an assessment of—

(a) the size, number, and location of companies claiming the increased annual investment allowance,

(b) the impact of this relief upon levels of capital investment, and

(c) the percentage of total business investments that were covered by this relief in 2019, 2020 & 2021.’

This new clause would require an assessment of the take-up and impact of the temporary increase in the AIA.

New clause 11—Assessment of Economic crime (anti-money laundering) levy

‘The Government must publish within 12 months of the Act coming into effect an assessment of the impact of Part 3 of this Act (Economic crime (anti-money laundering) levy) on the tax gap and how it has affected opportunities for tax evasion, tax avoidance, and other economic crimes.’

This new clause would require an assessment of the impact of the Economic crime (anti-money laundering) levy on the tax gap and on opportunities for tax avoidance, evasion and other economic crimes.

New clause 12—Review of avoidance provisions of sections 84 to 92 on the tax gap

‘The Government must publish within 12 months of the Act coming into effect an assessment of the provisions in sections 84 to 92 of this Act on the tax gap in the UK.’

This new clause would require an assessment of the impact of the provisions on tax avoidance in clauses 84 to 92 on the tax gap.

New clause 13—Review of provisions of section 85 and publication of information on overseas property ownership

‘(1) The Government must publish within 12 months of this Act coming into effect an assessment of the impact of the provisions of section 85 about the publication by HMRC of information about tax avoidance schemes.

(2) This assessment must include consideration of the impact of the publication of a register of overseas property ownership upon the promotion of tax avoidance in the UK.’

This new clause would require an assessment of the impact of the provisions of clause 85, and consideration of the impact of publishing a register of overseas property ownership.

New clause 14—Review of reliefs on investments

‘The Government must publish within 12 months of this Act coming into force an assessment of the impact on the tax gap of the reliefs on investments contained in this Act, and of whether those reliefs have increased opportunities for tax evasion and avoidance.’

New clause 15—Effect on GDP of international matters in Act, and of whole Act

‘(1) The Government must publish an assessment of the impact on GDP of—

(a) the provisions in sections 24 to 28 of this Act, and

(b) this Act as a whole.

(2) The assessment must also compare these impacts to the impacts had the UK—

(a) remained in the European Union, and

(b) left the European Union without a Future Trade and Investment Partnership.’

This new clause would require a Government assessment of the effect on GDP of the international provisions of the Act, and of the Act as a whole, in different scenarios.

New clause 16—Review of impact of Residential property developer tax on the tax gap—

‘The Government must publish within 12 months of this Act coming into effect an assessment of the impact of Part 2 of this Act (Residential property developer tax) on the tax gap, and of whether it has increased opportunities for tax evasion and avoidance.’

This new clause would require a Government assessment of the impact of the Residential Property Developer Tax introduced in this Bill, and of its effect on opportunities for tax evasion and avoidance.

New clause 17—Impact of Act on tackling climate change

‘The Government must publish within 12 months of this Act coming into effect an impact assessment of the changes in the Act as a whole on the goal of tackling climate change and the UK‘s plans to reach net zero by 2050.’

New clause 18—Vehicle taxes: effect on climate change goals

‘The Government must publish within 12 months of this Act coming into effect an assessment of the impact of sections 77 to 79 on the goal of tackling climate change and on the UK‘s plans to reach net zero by 2050.’

New clause 19—Review of impact of reliefs in Act on the tax gap

‘The Government must publish within 12 months of the Act coming into effect an assessment of the impact of the tax reliefs in this Act on the tax gap, and of whether they have increased opportunities for tax evasion and avoidance.’

New clause 20—Uncertain tax treatment

‘The Government must publish within 12 months of this Act coming into effect an assessment comparing the rates of uncertain tax in the UK to those of all other OECD countries.’

New clause 21—Emissions certificates

‘The Government must publish within 12 months of this Act coming into effect an assessment of the impact of sections 99 and Schedule 16 of this Act on the goal of tackling climate change and the UK‘s plans to reach net zero by 2050.’

New clause 22—Composition of the Office of Tax Simplification

‘The Government must publish within 12 months of this Act coming into effect an assessment of the composition of the Office of Tax Simplification membership with a view to ensuring it is diverse and representative.’

New clause 23—Capacity of the OTS

‘The Government must publish within 12 months of this Act coming into effect a review of the membership and capacity of the OTS, including consideration of the capacity the membership would have to deal with an expansion of its remit to include fairness in the tax system.’

New clause 24—Gambling

‘The Government must publish within 12 months of this Act coming into effect an assessment of the provisions of clause 80 on—

(a) the volume of gambling, and

(b) public health.’

New clause 25—Impact of Act on tax burden of hospitality sector

‘The Government must publish within 12 months of this Act coming into effect an assessment of the impact of the Act as a whole on the tax burden on the hospitality sector.’

New clause 26—Review of the residential property developer tax

‘(1) The Government must publish a review of the residential property developer tax within three months of the passing of this Act.

(2) The review under subsection (1) must assess how much money the RPDT would raise at a range of rates at 0.5 percentage point increments.’

This review would assess how the revenue the RPDT would raise at range of rates at 0.5 percentage point increments.

New clause 27—Review of Economic crime (anti-money laundering) levy

‘(1) The Government must publish an impact assessment of the operation of the Economic crime (anti-money laundering) levy within six months of Royal Assent to this Act.

(2) The assessment carried out under subsection (1) must include an assessment of the contribution to the effectiveness of the levy that a register of beneficial owners of property would make.’

This new clause would require the Government to produce an impact assessment of the operation of the new Economic crime (anti-money laundering) levy, and assess how a register of beneficial owners of property would contribute to the effectiveness of the levy.

Amendment 35, page 2, line 30, leave out Clause 6.

This amendment deletes clause 6 which reduces the rate of the banking surcharge and the level of the surcharge allowance.

Amendment 36, page 10, line 44, at end insert—

“, and at the end of section 32(1) insert “, but eligibility for the increased maximum annual allowance from 1 January 2022 to 31 March 2023 is available only to businesses which can demonstrate that they have taken steps to reduce carbon emissions within their own business models and have set out further steps for how they plan to reduce carbon emissions towards a net zero goal”.”

This amendment would restrict access to the extended temporary increase in annual investment allowance to businesses that support transition to “net-zero”.

Amendment 37, page 10, line 44, at end insert—

“, and at the end of section 32(1) insert “, but eligibility for the increased maximum annual allowance from 1 January 2022 to 31 March 2023 is available only to businesses which do not have a history of tax avoidance”.”

This amendment would restrict access to the extended temporary increase in annual investment allowance to businesses that do not have a history of tax avoidance.

Amendment 38, page 11, line 10, at end insert—

‘(3) In paragraph 2(3) of Schedule 13 of that Act—

(a) after “second straddling period is” insert “the greater of (a)”; and

(b) after “of that sub-paragraph” add “and (b) the amount (if any) by which the maximum allowance under section 51A of CAA 2001 had there been no temporary increase in the allowance exceeds the annual investment allowance qualifying expenditure incurred before 1 April 2023.”’

This amendment would amend the transitional provisions for the reversion of the AIA to £200,000 on 1 April 2023, to ensure that smaller businesses with lower levels of qualifying capital expenditure are not disadvantaged by having their effective AIA limit restricted to significantly less than £200,000 for a period.

Amendment 34, page 19, line 41, at end insert—

‘(10A) The Secretary of State must consult trade unions representing UK seafarers before making any regulations pursuant to subsection (8).’

This amendment would require the Government to consult trade unions representing UK seafarers before making regulations pursuant to subsection (8) of this clause. This subsection extends to ships not registered in the UK the power of the Department to make regulations requiring proof from companies and groups within the tonnage tax regime that their ships comply with safety, environmental and working conditions.

Government amendments 1 to 13.

Government new schedule 1—Freeport tax site reliefs: provision about regulations.

Government new schedule 2—Public interest business protection tax.

Government amendments 14 to 33.

Lucy Frazer Portrait Lucy Frazer
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I thank all Members who have taken part in the debates on the Finance Bill so far. Today we are focusing on a number of potential amendments to the Bill. Many of the amendments seek to ensure the proper functioning of the legislation in response to stakeholder scrutiny and feedback. Others take forward responses to substantive issues that have emerged during the Bill’s passage. I will address each amendment in turn.

Amendments 1 to 8 to clause 36 relate to the Bill’s measures to establish a residential property developer tax, or RPDT. These amendments ensure that those holding a specific type of build licence giving them effective control of the land are subject to RPDT. That will ensure that the legislation works as intended, and closes a potential loophole.

Amendments 9 and 10 to clause 58 relate to the Bill’s clauses on the economic crime (anti-money laundering) levy. These amendments seek simply to amend clause 58 by replacing two references to “entities that are” with “persons”, providing further clarity by using terms consistently throughout the legislation.

Amendments 11 to 13 form part of the extensive action that the Government are taking to address the current heavy goods vehicle driver shortage. As Members will remember, at the last autumn Budget, the Government temporarily extended cabotage rights for foreign operators of heavy goods vehicles until 30 April this year to ease supply-chain pressures. That change was made on a short-term basis to support essential supply chains. These amendments seek to introduce an enabling power through the Bill to make temporary changes to vehicle excise duty legislation should the Government decide to introduce a further temporary extension of road haulage cabotage flexibilities beyond April and up to 31 December 2022. These amendments do not, in themselves, extend those flexibilities. The Government have made no decision to extend the cabotage easement. Any such decision would be taken only after consulting with interested parties, and in consideration of wider pressure on supply chains at the time.

Amendments 14 to 17 are technical amendments to clauses 7 and 8, and to schedule 1, which seek to abolish the basis period rules for the self-employed and partners, and introduce the tax-year basis from April 2024. The amendments will ensure that eligible taxpayers are able to benefit from certain tax reliefs, including double taxation relief, that are given as a deduction against tax rather than against profits during the transition to the new tax-year basis. The amendments are required to avoid an unintentional outcome of the basis period reform transition rules.

Amendments 18 to 30 address a number of technical points in the new asset holding companies regime to better reflect the original policy intentions. These amendments follow engagement with industry. They will make the rules of the tax regime clearer for companies that will use it, and will ensure that it can be more effectively implemented.

Amendments 31 to 33 relate to accounting standards. They make minor technical changes to part 2 of schedule 5, which revokes the requirement for life insurance companies to spread their acquisition costs over seven years for tax purposes. These changes will simply ensure that the legislation functions as originally intended.

I turn now to the Government new clauses and new schedules. New clause 1 and new schedule 1 will deal with provisions about regulations regarding freeports. These new provisions seek to build on our existing powers that allow us to introduce, amend and remove conditions to enable businesses to qualify for freeport tax reliefs. The provisions do that by allowing the Government to use secondary legislation to remove and recover those reliefs from individual businesses, if necessary on a prospective basis. This power could be used to enforce compliance. For instance, it would allow the Government to introduce new reporting requirements if needed, and to respond if companies did not adhere to them by removing reliefs or taking other action.

These provisions support our critical freeports programme, which will help to create employment in left-behind areas, and allow them to prosper with additional and much-needed investment. We look forward to seeing them, and the businesses within them, prosper.

New clause 3 and new schedule 2 seek to legislate for a new public interest business protection tax. Energy groups will often enter into derivative contracts to hedge their exposure to fluctuations in wholesale energy prices, and help to ensure that they can supply energy to customers at the prices fixed and under the price cap set by Ofgem. They will typically use a forward purchase agreement to buy energy in the future at a price that is fixed at the time when the contract is entered into.

The Government have been monitoring the global rise in wholesale energy prices very closely. We have a serious concern about certain arrangements whereby energy suppliers do not own, control or have the economic rights to the key assets needed to run their businesses, including forward purchase contracts. It is currently possible for an energy business to derive value from such a valuable asset for its own benefit and the benefit of its shareholders, while leaving its energy supply business to fail, or increasing the costs of a failure. The costs of that failure would then be picked up by the taxpayer or consumers, because it would trigger a special administration regime or a supplier of last resort scheme. These are special Government-funded administration routes that help to ensure that UK customers continue to be supplied with energy.

Ofgem is now consulting on a range of regulatory actions that it proposes to take to ensure that the right protections are in place in these circumstances. That work will ensure the ongoing resilience of energy supply businesses. However, it will take months for these changes to come into effect. The Government recognise that it would be unacceptable for a Government to allow business owners to profit from engineering this kind of outcome in the interim period, at great and direct expense to the taxpayer.

Peter Grant Portrait Peter Grant (Glenrothes) (SNP)
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I do not think that anyone would argue with the intention behind the new schedule, but it is not so much a new schedule as a Bill within a Bill. It is 25 pages long, and it introduces a tax that has not existed before. It was tabled less than 48 hours ago, and as far as I can see there has been no consultation with anyone. Given that this issue has been known about for so long, why has it taken until now for the Government to table such a large, complex and unwieldy amendment to their own legislation?

Lucy Frazer Portrait Lucy Frazer
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I understand the hon. Gentleman’s concern. The Bill has been tabled at this time because Ofgem has identified a risk related to energy suppliers in the circumstances that I have described. If that eventuality came to pass, there would be a significant loss to taxpayers if we did not introduce the legislation to prevent it. I understand his concern, but it is necessary for the Government to introduce this tax and to introduce it now, to ensure that these risks do not materialise.

Mel Stride Portrait Mel Stride (Central Devon) (Con)
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Am I right in assuming that the purpose of the new tax is to discourage certain types of behaviour rather than to raise revenue?

Lucy Frazer Portrait Lucy Frazer
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My right hon. Friend is right. We are not seeking to raise revenue; we are seeking to prevent certain circumstances from coming about, and we hope that this deterrent will be sufficient. Of course, if it were not, we would be able to recoup the money by way of tax. He will have spotted that the legislation is only in force for a short period to allow Ofgem to take regulatory action to ensure that we deal with this issue in the appropriate way through regulation rather than by bringing preventive action by way of a tax.

As I was saying, this new tax will have effect where steps are taken to obtain value from assets that materially contribute to a licensed energy supply business entering into special measures or to the increased costs of the business where it is a subject of special measures on or after 28 January this year and before 28 January next year. The tax will apply to the value of the assets that are held in connection with a licensed energy supply business where the assets in scope of the tax exceed £100 million, including assets held by connected persons. This is to ensure that the tax would capture only the very largest energy businesses. The tax will apply at a rate of 75% so as to be an active and effective deterrent against actions that are not in the public interest, and to recoup a substantial proportion of the costs that would otherwise fall to the Government under special administration measures in the event that such action was taken, as my right hon. Friend the Member for Central Devon (Mel Stride) pointed out.

In order to ensure that the tax is robust against avoidance activity, and given the sums at stake, the Government consider it necessary for Her Majesty’s Revenue and Customs to be able to recover the tax from other persons if it cannot recover it from the relevant company. These joint and several liability provisions will apply only to companies under common ownership, as well as investors and persons connected with those investors in limited circumstances. Safeguards are also in place to permit certain affected persons to make a claim for relief to limit the amount of joint and several liability to the amount that they potentially benefit from such transactions. It is our hope and expectation that no business would pursue such action and that the tax will not be charged. The tax is a temporary and necessary safeguard that will protect the taxpayer and energy consumers in the interim period before the regulatory change takes effect.

The Government amendments will ensure that the legislation works as it should and protects the interests of the people of this country. I therefore commend to the House amendments 1 to 33, new clauses 1 and 3, and new schedules 1 and 2, and I urge Members to accept them.

James Murray Portrait James Murray (Ealing North) (Lab/Co-op)
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Any member of the public hearing that the Government were today voting their Finance Bill through the House of Commons might expect such a Bill to do something to help with the cost of living crisis facing families up and down this country. Our new clause 6 makes this simple point. It asks the Government to set out how the measures in the Bill will affect household finances, the amount of tax working people are paying, and the rate of growth in the economy in the coming year.

I suspect that Ministers will want to avoid our new clause 6 because they know what the answers will be. The truth is that whether through this Bill or any other means, the Government are letting energy bills soar, refusing to cancel their national insurance hike, and failing to set out a plan for growth. The Conservatives’ failure to grow the economy over the last decade, and their inability to plan for growth in the future, has left them with no choice but to raise taxes. This low-growth, high-tax approach to the economy has become the hallmark of these Conservatives in power.

Let me make it clear why our new clause 6 might make such difficult reading for Conservative Members. People see their energy bills going up and about to soar, inflation at its highest rate in decades, and their wages falling in real terms—and what do the Tories do? They raise national insurance by £274 for a typical full-time worker. It is the worst possible tax rise at the worst possible time. We warned that it was wrong when the Government pushed it through Parliament last year. Our arguments have only got stronger since then, so instead of digging in, the Chancellor and the Prime Minister should do the right thing and scrap this tax hike on working people and their jobs. Despite calls on the Government from all sides, they are so far refusing to budge. In this Bill, they offer no relief to working people, who face soaring prices and tax bills. They have managed to find time, however, to put into law a tax cut for banks, as we see in clause 6.

Clause 6, which our amendment 35 seeks to delete, would see the rate of the banking corporation tax surcharge fall from 8% to 3%, with the allowance for the charge raised from £25 million to £100 million. That will cost the public finances £1 billion a year by the end of this Parliament. Throughout the passage of the Bill, the Financial Secretary to the Treasury has used smoke and mirrors desperately to pretend that the Government are not cutting taxes for banks. She has tried to hide this tax cut under a separate change to corporation tax that may never even come to pass.

Anthony Browne Portrait Anthony Browne (South Cambridgeshire) (Con)
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Including corporation tax and the surcharge, the taxation of banks is currently at 27%. After this legislation, it will be 28%. Does the hon. Member agree that 28% is higher than 27%, and therefore taxes on banks are actually going to rise, not go down?

James Murray Portrait James Murray
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It is the same tired doublespeak by Government Members trying to hide this tax cut for banks. However they try to present it, in this Bill the banking surcharge is cut from 8% to 3%; it is there in the policy costings from the Treasury that the measure will cost the public purse £1 billion a year by the end of this Parliament. If Government Members do not like this tax cut, they can simply vote with us to delete it at the end of Report, rather than pretend it does not exist.

Anthony Browne Portrait Anthony Browne
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Will the hon. Member give way?

James Murray Portrait James Murray
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No, I am going to make some progress.

The truth is that this tax cut is going ahead at a time when bankers’ earnings are on the rise, with investment banks’ profits soaring off the back of a wave of takeovers and mergers caused by the pandemic. The UK arm of Goldman Sachs—a business that the Chancellor will know well—boosted its pay by more than a third last year, Barclays is set to raise bonus payments by more than 25% in its corporate investment bank, and boutique banks in the City are expected to do especially well, as they are exempt from rules that limit bonuses.

These measures show just how out of touch this Government and this Chancellor are: they are championing a tax cut for banks while ignoring calls from the TUC, the Federation of Small Businesses, the Institute of Directors, Labour MPs, some on their own side, and the British public, to abandon their tax cut on working people and their jobs. If Ministers are still refusing to listen, today we are giving their Back Benchers an opportunity to say, “Enough is enough.” They can vote with us tonight to cancel the banking tax cut and make the Government think again.

The national insurance hike is wrong because it threatens people’s financial security. I will now turn to other aspects of the Bill that relate to wider economic security and the threat of economic crime.

Simon Hoare Portrait Simon Hoare (North Dorset) (Con)
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Just before the hon. Gentleman leaves the rise in national insurance contributions—a difficult decision for any Government, particularly given the backdrop of a manifesto commitment—surely he would criticise the Government were they to put the ideology of a manifesto front and centre, instead of trying to find a way of ameliorating what would clearly be growing waiting lists and people queuing at all our advice surgeries and offices, complaining that they could not get the treatment they needed, which they were denied during the pandemic. Surely that is the right thing to do for public health and all our citizens.

James Murray Portrait James Murray
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No one denies that the NHS needs more money, but hiding behind the hon. Member’s intervention is the idea that there is no other way to raise the £12 billion that the national insurance rise will raise. It takes some cheek to hear that from Conservative Members, when just yesterday we heard of £8.7 billion being wasted on PPE procurement and £4.3 billion of fraud being written off by the Chancellor—there is the £12 billion. Frankly, the Chancellor should stop wasting money, stop letting criminals get away with fraud, and stop expecting working people to pick up the bill.

Peter Grant Portrait Peter Grant
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I commend the hon. Member for reminding the Government just how much of our money they have wasted in the last year. Does he remember a message on the side of a bus that promised a huge cash boost to the NHS if we left the European Union, and has he wondered what happened to that money?

James Murray Portrait James Murray
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I remember many slogans that the Conservative party has used and I would not trust many of them. However, I would like to make some progress and talk about what the Government are doing, or failing to do, to tackle economic crime.

17:00
We support the principle behind the economic crime levy that part 3 of the Bill seeks to introduce, although we and others have questioned whether it will be enough. More widely, however, it is impossible to take this Government seriously when it comes to economic crime. Ministers seem to change their mind over an economic crime Bill by the day and, as our new clause 4 makes clear, we are all still waiting for the Government to establish a register of beneficial owners of overseas entities that own UK property.
This new public register is desperately needed, has been greatly delayed and would bring transparency to the overseas ownership of UK property. It would help to stop the use of UK property for money laundering and would finally help to tackle the shocking reputation our country has earned for being the world’s laundromat for illicit finance. Plans to introduce a register were first announced by the Conservatives in 2016 and legislation was first published in 2018. We were promised that it would be operational by 2021. It is now 2022, so this is a promise clearly broken by the Conservatives. We have seen all manner of hand-wringing from Treasury Ministers over plans for the register during the passage of the Bill. At one point, they tried to imply that failing to establish the register was the Business Secretary’s fault, but most often they have fallen back on the dreaded phrase, “We will introduce legislation to Parliament as soon as parliamentary time allows”.
There is simply no urgency from Treasury Ministers to get the register in place and no urgency whatever from the Prime Minister. Yet, as Members on both sides of the House agree, we need to rid our economic system of money laundering, and that need has become more urgent than ever with the unfolding crisis over Ukraine. Economic sanctions against Russia will be hamstrung as long as those linked to Putin and his regime can hide their wealth. They are hiding that wealth here in the UK, having bought up some of our country’s most expensive property. Much of it will be found in Knightsbridge and Belgravia—in the same SW1 postcode as the House of Commons. Transparency International has identified £1.5 billion-worth of real estate in the capital owned by Russians accused of corruption, or with ties to the Kremlin. The ownership of these firms has been revealed only through court cases, document leaks and investigations by journalists, so it is likely that that figure only scratches the surface. The truth is that high-end property in the UK plays a central role in Russian money laundering, so the Government’s refusal to introduce the register of overseas owners of UK property undermines our economic security.
The UK Government have at least one hand, and not far off both hands, tied behind their back when it comes to pursuing the dirty money of Kremlin-connected oligarchs, because we simply do not know where that money is. We have the legislation to introduce a register to help solve this problem ready to go, but the Conservatives are refusing to implement it. Why is that? Well, The Times reported last week that the Tories have received £2 million from donors with Russian links since the right hon. Member for Uxbridge and South Ruislip (Boris Johnson) became Prime Minister in 2019. The Centre for American Progress think tank has said that
“uprooting Kremlin-linked oligarchs will be a challenge given the close ties between Russian money and the United Kingdom’s ruling Conservative party”.
There you have it: we know Russian oligarchs linked to Putin are hiding dirty money in high-end property here in our country. Much of it has been used to buy up mansions in Knightsbridge and Belgravia, a mile from where we are as I speak. It is right under our noses and I bet they are laughing at us. We know exactly what to do to stop them. So we ask: why have the Government not acted? At best, it is disinterest in an issue of national and economic security. At worst, it could be argued that it is Conservative party self-interest, given some of its funders and friends. If Conservative Members feel as angry and frustrated as we do, they should join us by voting today for new clause 27, which brings together members of different parties to keep up the pressure on the Government to introduce the promised register of overseas entities who own property here in the UK.
We have also tabled an amendment that relates to the residential property developer tax introduced by part 2 of the Bill. We support the principle behind that tax, which will be levied on the largest developers in the residential property sector. It should help to make sure that those responsible for putting dangerous materials on buildings will pay something towards the very significant costs of removing unsafe cladding. The tax will be levied at 4%, with an expectation of raising £2 billion over 10 years. Although we support the principle of the tax, we should be clear that it will in no way end the cladding scandal, nor will it even settle the question of who pays for the crucial remediation works.
When the Bill began its passage in November 2021, the Government were expecting leaseholders in buildings of between 11 and 18 metres to take on forced loans to pay for the costs of cladding remediation in their building. That prospect hung over leaseholders’ heads for almost a year until, finally, the Secretary of State for Levelling Up, Housing and Communities realised that the Government were wrong to do this. He announced last month that he now expects developers to pay for remediating mid-rise buildings of between 11 and 18 metres. We support any moves to protect leaseholders from these costs, and we have always made it clear that, among the many players involved in the cladding scandal who should be paying to fix it, leaseholders must absolutely not be one of them.
We would like to know more about the Treasury’s view on how the estimated £4 billion needed to remediate buildings of between 11 and 18 metres will be raised. The Housing Secretary has said that he hopes the £4 billion cost will be met by a voluntary fund to which he will persuade developers to contribute. We would like to know the Treasury’s view on what will happen if developers do not come to the table and hand over that £4 billion.
We want to make sure that leaseholders are protected and that the money does not end up coming out of existing affordable homes funding. Last week, my hon. Friend the Member for Greenwich and Woolwich (Matthew Pennycook), the shadow Housing Minister, asked for reassurance on that point. He asked the Housing Secretary to guarantee that funding already allocated for new social and affordable housing will not be diverted to the building safety crisis should he fail to extract sufficient money from developers. There was no such commitment forthcoming from the Housing Secretary.
It is for that reason that we tabled new clause 26 to press Ministers on what other options they might consider. I would be grateful if the Minister could confirm whether there are any circumstances, if the Housing Secretary is unable to persuade developers to hand over £4 billion voluntarily, in which the level of the residential property developer tax could be reconsidered to help to meet some of the shortfall.
Finally, I would like to address amendments tabled by other Members. My hon. Friend the Member for Easington (Grahame Morris) tabled new clause 2, which would require the Government to review and report to the House on the impact of clause 25 on the training and employment of UK seafarers. I thank him and his colleagues from the National Union of Rail, Maritime and Transport Workers for meeting me recently to explain why they believe the tonnage tax should be amended to strengthen the existing requirements to train UK seafarers.
When clause 25 was debated in Committee, the Minister did not mention the training commitment in the tonnage tax. I would therefore like to add my voice to that of other hon. Members in asking the Government today to set out their plans for the training and employment of UK seafarers.
I also commend my hon. Friend the Member for Streatham (Bell Ribeiro-Addy) for tabling new clause 7, which would require the Government to publish a proper impact assessment of this Bill. The economy is not an abstract concept, and the Government’s decisions on how it runs will affect people’s lives, and different communities in different ways. The people we represent, in communities across the country, deserve a Government who will be up front and transparent about the impact their economic decisions will have, so we would welcome a proper impact assessment.
Across the country, people are worried about the future. Energy bills are soaring and inflation is at its highest in decades, yet the Tories propose to raise national insurance by £274 for a typical full-time worker. That shows just how out of touch the Chancellor is, and it adds insult to injury that he is doing it in the same breath as cutting taxes for banks by £1 billion a year.
The tax rise threatens the financial security of families across the country, and our country’s economic security is being left exposed by this Government. Their shocking failure, apparently driven by self-interest, to put in place a public register of overseas owners of UK property leaves us unable to use the full force of economic sanctions against Putin and his allies. This Government will not protect people from the cost of living crisis, and they will not protect our country from Russian dirty money; the only thing they want to protect is the Prime Minister’s job. I know Tory Back Benchers have not yet summoned the courage to change their leader, but I urge them to do the right thing, at least today, and join us in voting to change this Bill.
Jackie Doyle-Price Portrait Jackie Doyle-Price (Thurrock) (Con)
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It is a great pleasure to address the House on the subject of new clause 2, which I am happy to sponsor with the hon. Member for Easington (Grahame Morris), with the support of the RMT. I recognise that the Government are reviewing the tonnage tax regime with exactly the right attitude, but I encourage them to think more widely about how we genuinely get a post-Brexit bonus for the entirety of this industry—not just the shipowners, but the workers. I make my comments from my position as chairman of the all-party group for maritime and ports. I am very proud of our maritime sector and I am very proud to represent the ports in Thurrock, particularly in Tilbury and Purfleet, and, of course, the Thames freeport.

The great thing about this Finance Bill is that it shows that the Government are taking advantage of the new freedoms that we have now that we have left the European Union. We now have more tax freedoms, which will encourage more business investment. I am greatly looking forward to watching the Thames freeport grow and grow. There has been a fantastic partnership between Forth Ports, which is based in Scotland, DP World, which invests in London Gateway, and of course Ford at Dagenham. It will bring a whole new lease of life to economic opportunities on the Thames. But I am very keen that workers get a better chance to share in our post-Brexit freedom. It is with that in mind that I have been very happy to engage with the RMT and with the hon. Gentleman to give my support to this sector.

If we are genuinely a maritime nation, which is one of those platitudes that we often trot out in this Chamber, we should have our own maritime workforce, whether it be through ports, or those engaged in shipbuilding—I am very pleased that the Prime Minister has given his personal backing to expanding our shipbuilding sector and getting back to making ships here. But this is also for our seafarers. On a day when we are celebrating levelling up, we should remember that our coastal communities are among those in most need of levelling up. For the workers in those areas, the opportunity to have access to more opportunities for skilled jobs surely should be grasped. With that in mind, I support new clause 2 and the amendment sponsored by the hon. Member for Easington.

Let me tell Members a story about my constituency. I have many retired seafarers in my constituency, as I would, representing what I call the ports capital of the UK—they tell me these great stories of the romantic adventures that they had as young men travelling the world—but I have no seafarers among the current generation. Although the current tonnage tax regime encourages the shipping companies to invest in training opportunities for officers and cadets—all fine and good—I would like to see that extended to encourage more training opportunities for ratings, too. I cannot think of a better way for a young person to enter the world of work than to travel and to see the world while they are learning new skills. Many skills required on a ship can be migrated into employment later in life. To me, it seems like a no brainer if we really want to open up horizons and opportunities for all our young people. It feels a bit elitist to me if, with entirely the right attitude, we use this tax regime and the concessions around it to encourage investment and training and restrict that to the officer class.

We know what has happened in the shipping industry. We are training people to fill senior positions, while shipping companies are recruiting cheaper labour from elsewhere in the world, and we all know where those countries are. At a time when we are encouraging companies to be more virtuous about their supply chains and tackling the issue of modern slavery, it seems slightly hypocritical to me that we turn the other way when we know of companies that are taking advantage of cheap labour in the maritime sector.

To be fair, the Government have done an awful lot of work on this. I congratulate them on making changes to minimum wage legislation, for example, which has improved conditions in our waters, but we are nothing if not leaders by example. I encourage the Government to go further. I am grateful for the conversation I have had with my right hon. and learned Friend the Financial Secretary to the Treasury and my hon. Friend the Exchequer Secretary to the Treasury about this. As they go through the review, I encourage them to think imaginatively about what more we can do to properly use this important measure to encourage more employment in that industry.

17:15
I have nothing much more to add, other than to say that it is a great pleasure to work with Opposition colleagues. I am not sure that I ever thought I would find myself tabling an amendment on behalf of the RMT, but that is what Brexit has done, to be fair—the RMT’s support of Brexit was not without good reason. We are used to having a world run from Brussels, where the business lobby was based on cosy corporatism. In how we now approach economic policy post Brexit, we are determined to ensure that it delivers for the whole of Britain and the whole of our business community; let us ensure that it delivers for the workers too.
Alison Thewliss Portrait Alison Thewliss (Glasgow Central) (SNP)
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It is a pleasure to follow the hon. Member for Thurrock (Jackie Doyle-Price). I very much agree with the principles of her new clause 2 because, if this tonnage tax is to mean anything, it should be about more than just changing a flag; it should be about changing the culture, as she mentioned. I am proud to have in my constituency City of Glasgow College, which has trained a lot of seafarers. It is a big hub for maritime education worldwide. It would be a real boon to it if we could encourage that within the UK, as we are at the moment, and in an independent Scotland it will certainly be a beacon to the world as an island nation.

I rise to speak to the amendments and new clauses in my name and those of my colleagues. As we did in the Bill Committee, we want to highlight the points on which the Finance Bill falls short. Last year, we saw COP26—also in the great constituency of Glasgow Central, where the world came to Glasgow—and I feel that the Finance Bill could have been the opportunity to mark in the legislative process in this place how important the climate change agenda is. It should have run through this Finance Bill and this Budget as through a stick of rock, but unfortunately we are left with just a fluffy sweetie in the bottom of someone’s pocket. It is not enough.

We therefore feel that there should be an assessment of the effect of the Bill’s provisions on climate change and how they affect the UK Government’s net zero targets. In Scotland, we have more ambitious net zero targets than the UK does. The Scottish Government are delivering lasting action to secure a net zero and climate-resilient future in a way that is fair and just for everyone. The SNP, in government in Scotland, is committed to a just transition to net zero emissions by 2045, with an ambitious interim target in 2030 of a 75% reduction—targets that form the heart of Scottish Government policies and actions.

An example of how that is already being delivered includes the groundbreaking and truly historic ScotWind announcement. We also already have the equivalent of almost 100% of gross electricity consumption generated from renewable sources in Scotland. We have commitments for the renewal of peatland, for the planting of trees and for the tackling of biodiversity loss, and we are leading the Edinburgh process to ensure that a whole-of-Government approach is adopted globally, while committing to protect 30%—and highly protect 10%—of our land for nature by 2030.

All those things are laudable policies, but we see no actions by the UK Government to incentivise them. Finance Bills are full of tax cuts, tax rises, incentives and different measures, and this Bill could have moved so much further to incentivise net zero through the measures introduced. The Bill does not go far enough. It is important to measure not only what is being done, but what could be done. Were the UK Government serious about their climate change commitments, they would rethink the illogical decision to deprioritise the carbon capture and storage facility in the north-east of Scotland. It was a real opportunity. The Government could have and should have gone further, but they short-changed Scotland yet again.

We support a great number of the new provisions in the Bill to do with economic crime. Members should have read already the excellent report released by the Treasury Committee, on which I sit, and which I came from earlier on this afternoon. The 11th report of the Committee, on economic Crime, is a very compelling and detailed read. It notes:

“Economic crime is a major and rapidly growing problem in the UK”,

and that while there has been a range of different initiatives by the UK Government, economic crime

“seems not to be a priority for law enforcement.”

Ministers came to the Committee and told us that they were “not happy” with the progress the Government have made in tackling economic crime, and I could not disagree with the Government on that point. There is certainly a lot more to be done.

While the economic crime levy is broadly welcome, it strikes me that a lot of taxes here are taxing people who are doing the right thing already, rather than chasing the people who are not. That really ought to be more the priority, because we have seen a Minister in the House of Lords resign because of the Government not doing enough and being frustrated at the lack of action by the Government to tackle fraud in the coronavirus loan schemes. There is an awful lot more that the Government could and should be doing on this.

We seek movement on the economic crime Bill. We want there to be an economic crime Bill because so much of the legislation on this issue is still held at Westminster. On the registration of companies, for example, I have spoken long and weary, and will continue to do so, about the deficiencies in Companies House. The register is complete and utter guff, in that people can put anything in and it is not checked, because there is only an information gathering function, rather than any kind of checking, verification or anti-money laundering organisation at Companies House, and that needs to change. We very much want to see movement on the long overdue registration of overseas entities Bill, and we support all amendments to this Finance Bill to that end. I sat on the Joint Committee, with Members of the House of Lords, on the draft Registration of Overseas Entities Bill, and we took copious information from experts in the field. They said to us, “If you shut down this route, we know where people are going to go next”, and “If you do this, then this will happen.” We made recommendations to the Government, and the Government did not even at that time take up all the recommendations the Committee made.

Since that report was published and the Joint Committee sat, things have only got markedly worse. The criminals are getting away with more, and that has a real effect, because there are implications if those buying up huge swathes of London property cannot be traced. If that property, which should be housing people, is not available to them because it is being used as a means of money laundering, that should worry us all. There are of course implications more widely of the money coming in from Russian oligarchs, with the Government being left vulnerable in dealing with the wider crisis in Ukraine.

If we do not know who owns such property, how can we sanction them and follow them up? How can we take some action against those using the UK as a means of laundering their dirty lucre? We cannot, and it is really important that the UK Government act on this more urgently than they have before. As the hon. Member for Ealing North (James Murray) mentioned, some of this began in 2016. There were Bills in 2018, including the opportunities in the Sanctions and Anti-Money Laundering Bill in 2018, and all such opportunities have been missed, and they are being missed yet again in the Finance Bill we are discussing this afternoon. I think there needs to be an awful lot more action taken, and an awful lot more quickly.

I have quoted other people talking about economic crime recently, but I want to mention Professor Sadiq Isah Radda, who, as the executive secretary of the Presidential Advisory Committee Against Corruption in Nigeria, told our Prime Minister that London was actually

“the most notorious safe haven for looted funds in the world today”.

That really should spur the Government here to action. This has been going on for far too long, and it absolutely must be tackled. It is a stain on the UK and, through things such as Scottish limited partnerships—the legislation those on is reserved to here; it has nothing to do with Scotland—it tarnishes Scotland with a dirty name by association.

Each Finance Bill makes our tax code more complex and, within that, there are more opportunities for people to seek loopholes and ways to reduce the tax that they should pay. For all of us, tax should be regarded not as some kind of burden, but as a duty and the price we pay for living in a civilised society. The more complicated the tax code, the more it can be exploited.

That complexity is hinted at somewhat in the corrective amendments that Ministers have tabled at this late stage. Although this Bill is so complicated, they come to us on Second Reading and in Committee and say, “Oh yes, all things are fine”, but today, at this late stage, we find that things are not quite right and have to be corrected. That makes it all the more worrying that the Government are bringing in this whole new proposal—the public interest business protection tax—without due notice. Again, there may be legitimate reasons for not giving due notice, but there is no consultation or evidence gathering that we get to see before we come here to vote on it today. That goes alongside my general complaint about Finance Bills, which is that their Bill Committees do not take evidence and they should, because that is really important. The public interest business protection tax may well be laudable, but we just do not know sufficiently whether it will be effective, what the evidence is or the Government’s full motivations for introducing it.

I am very grateful to George Crozier of the Chartered Institute of Taxation and the Association of Taxation Technicians, who wrote to me last night with some of his concerns about the proposal and the way that it has appeared at this late stage. Some of his questions about bringing in a new tax without due notice are about the mechanisms in the Bill. It is supposedly time-limited to 12 months, so theoretically it could then be extended in time and in scope by regulation. We do not know whether the Government intend to do that if Ofgem do not move as quickly as they want it to. Again, I accept that the proposal may be about getting Ofgem out of a hole. I am sure that is fine, if that is what the Government want to do, but does that not indicate that it is much easier to make tax changes than effective regulatory changes when there is a point of crisis?

I was very glad that, by coincidence, we on the Treasury Committee had Jim Harra of Her Majesty’s Revenue and Customs in front of us this afternoon. I asked him what he felt the impact of this proposal would be, including whether it would have an operational impact. He said, “No, because we hope it raises no taxes whatsoever”. It is unusual for the head of HMRC to say that he hopes to raise no tax from a measure in a Finance Bill, but that is what he said.

As an anti-avoidance, preventive measure, sure, that is fine, but the way in which it has been introduced this afternoon is not very good. We have seen this very late, and we get all the documents, explanatory notes and all the other things that come with it. To introduce something such as this in a Finance Bill seems very suboptimal, as the Minister is wont to say.

Bringing in a policy such as this also misses the wider set of reforms that are needed to the energy system, which the Government are not taking forward with sufficient urgency. My Glasgow Central constituents and households across these islands are urgently crying out for practical support with their energy bills. They need to know that they can afford to put the heating on in the morning. They need to know whether they can afford to use the cooker to heat up their kids’ dinner. They need to know whether they can turn the lights on or whether they all have to huddle in the dark with candles. That is the stark reality for so many people, and it is part of what is missing from this Government’s action. I said at Treasury questions yesterday that it had been almost two months since the Chancellor came to the House. Although he came yesterday, there was still no practical solution for such people; there is no practical solution in this Finance Bill.

While I am here, I want to ask the Minister about a query raised by the former Pensions Minister, Steve Webb, who pointed out a change on the HMRC website that says:

“Rates for Working Tax Credit, Child Tax Credit, Child Benefit and Guardian’s Allowance for the 2022 to 2023 tax year are provisional and may change between now and 6 April 2022”.

I asked HMRC officials why that change to the website was made and they did not know. I ask the Minister whether she knows why that change has been made. Are the Government riding to the rescue of those people, or is it just a change on a website? It would be useful for people to know the full implications.

17:34
I do not aim to keep the House any longer on any of the provisions of this Finance Bill; we have had plenty of time to have our say in Committee. However, the mechanisms in the Bill fundamentally will not fix the cost of living crisis that people up and down these islands face. They will not fix the problem of the national insurance rise heading down the tracks—that tax on jobs that will make it more difficult for employers to take people on at a time when their prices are rising and make it more expensive for individuals to get by. They will not fix the £20-a-week cuts to universal credit and child tax credits, or the urgent energy crisis that people are facing and are so fearful of.
We do not have great confidence in this Finance Bill or its ability to fix the problems that our nations face today. We long for the day when we can have a Government closer to the people in Scotland that will be able to take those decisions in a far more effective and compassionate manner.
None Portrait Several hon. Members rose—
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Eleanor Laing Portrait Madam Deputy Speaker (Dame Eleanor Laing)
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Order. I hope to bring in the Minister at 5.55 pm at the very latest, because many questions have been asked that hon. Members want the Minister to answer, so it is only fair to give her the time to answer them. Three hon. Members have tabled new clauses to which they must have the opportunity to speak. I must ask for short speeches, please; I hope we can manage without a time limit, but if those who are speaking to their new clauses can keep to five minutes, everyone will have the opportunity, however briefly, to address the House.

Layla Moran Portrait Layla Moran (Oxford West and Abingdon) (LD)
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I rise to speak on behalf of the Liberal Democrats, particularly on new clause 27, which is tabled in my name.

The Liberal Democrats have concerns about this Bill. People who work hard, pay their taxes and play by the rules are seeing their incomes squeezed through no fault of their own. They are being crippled by tax hikes, benefits slashes and skyrocketing bills, and today I am afraid the Chancellor is letting them down. He is providing less in extra catch-up funding for children than he is in a tax cut for bankers. In contrast, the Liberal Democrats are calling for a £15 billion catch-up fund for kids, support for small businesses and protection from energy bill rises for the most vulnerable, and we support all new clauses that help to that end. We live in precarious times and we must do more.

In the context of escalating tensions with Russia, I am also concerned about what is missing from the Bill. New clause 27 has support from both sides of this House. It is similar to new clauses 4 and 11, tabled by Labour and SNP Front Benchers—I am grateful to them for rowing behind this clause—but it also has Conservative Members as signatories, which goes to show the cross-party support for bringing in this measure.

The new clause asks for an impact assessment to be produced on the operation of the new economic crime levy, and would require the Government to assess how a register of beneficial owners of property would contribute to the effectiveness of such a levy. Sadly, due to the scope of the Bill, the new clause cannot introduce such a register, but that does not make the need for it any less urgent.

The register would close the loopholes that allow oligarchs to launder money through British property. Lax regulations have turned London into a playground and a laundromat for Russian oligarchs, with successive warnings from the intelligence and security communities painting the city as “Londongrad”. Prior to the pandemic, Transparency International identified 87,000 properties in England and Wales that were owned by anonymous companies registered in tax havens. A new analysis has found that, of the £6.7 billion-worth of UK property bought with suspicious money, £1.5 billion comes from Russia.

On Monday, the Foreign Secretary spoke about introducing new sanctions, and I welcomed that. It is interesting that The Moscow Times reported on Monday that the Kremlin was “alarmed” at the British threat and vowed to retaliate. The dirty money that oligarchs invest in yachts, football clubs and Belgravia mansions has close ties to Putin’s own wealth. We know how he operates: he gives them the money to buy the assets. If we aim at the oligarchs, we aim at Putin, but there is a problem, because we cannot sanction what we cannot see. Claims from the Government that we are standing up to Putin’s military manoeuvres ring hollow when he and his friends know full well that they have already hidden half the money in our own back garden, and the Government continue to do nothing about it.

Dirty money also undermines our credibility with our allies. The Centre for American Progress, a think-tank closely linked to the Biden Administration, said:

“Uprooting…oligarchs will be a challenge given the close ties between Russian money and the United Kingdom”.

I am afraid to say that the stench of corruption and dirty money wafts over our political system and the whole country, and it is incumbent on us here and the Government to clean it up. There is a way to do that, and it is through the economic crime Bill, but waiting for that feels like waiting for Godot. It should not be this difficult to get the Government to make good on their own promises, because it was a Conservative Government six years ago who said they would introduce it. Two thousand days later and we have had nothing.

Just this week, the Prime Minister stood at the Dispatch Box and announced plans for a register of beneficial ownership, but at this stage it feels like he is the boy who cried wolf. I urge the Minister to accept new clause 27, which has support on both sides of the House, to start those tentative steps, to show Putin we are serious and to make sure that we clean up dirty money from our politics and our country for good.

Grahame Morris Portrait Grahame Morris (Easington) (Lab)
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I appreciate the opportunity to speak to new clause 2 and amendment 34. I thank all Members who have co-sponsored or signed the new clause. It indicates extensive support not just from Labour Members, but from Members from across the House and a variety of parties. I must declare my interest as a member of the National Union of Rail, Maritime and Transport Workers parliamentary group, and I refer Members to my entry in the Register of Members’ Financial Interests.

New clause 2 is very important to UK-based employment in the maritime sector. The issue has been raised with the current shipping Minister, the hon. Member for Witney (Robert Courts), who is sympathetic to the arguments we are making, and previously with his predecessors, most notably the right hon. Member for South Holland and The Deepings (Sir John Hayes), who was enthusiastic about what we propose.

Clause 25 of the Bill makes tonnage tax more flexible for ship owners but no corresponding adjustments for seafarer jobs and skills based in the UK, as eloquently pointed out by the hon. Member for Thurrock (Jackie Doyle-Price). The tonnage tax’s original purpose—it was introduced by a Labour Government, by Gordon Brown—was to arrest the decline in training and employment opportunities for British seafarers in an increasingly deregulated labour market. We have seen the increasing dominance of flags of convenience.

I remind those on the Treasury Bench that at the time of the Falklands war—unbelievably, 40 years ago—there were 45,000 British-based ratings and officers in the UK. Today, that number is below 23,000. About a quarter of all seafarer jobs in the UK industry are UK-based. The Bill does not seek to improve the mandatory link to train officer cadets or to create a separate mandatory link for the training of ratings.

The comprehensive spending review Red Book commits the Government to

“explore how best to make use of existing powers regarding the training commitment”.

However, I understand from discussions with the maritime unions that the process, which I inform the Treasury Bench is being taken forward by the Maritime and Coastguard Agency, is not considering any specific measures to train British ratings or to employ British seafarers, including those who were trained on the tonnage tax vessels. This is a real wasted opportunity. If there is to be a Brexit dividend, we really must address that.

Perhaps it is a case of the Government, without taking action, inadvertently damaging the UK maritime sector, but there is an opportunity to put it right. New clause 2 would require the Government to review the impact of clause 25—tonnage tax—on employment and training for British officers and ratings, including the effect of changes to flagging arrangements on qualifying ships.

Jackie Doyle-Price Portrait Jackie Doyle-Price
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The hon. Member is making the case persuasively. Does he agree that one of the difficulties is that Government policy is siloed in this area? Perhaps that is why the Government are missing the opportunity. He is right that the maritime Minister—the Under-Secretary of State for Transport, my hon. Friend the Member for Witney (Robert Courts)—gets it completely and is sympathetic, but the decision-making capability rests with the Treasury. Does he think that we need to get the Government together to see the right outcome for everyone involved in the shipping industry?

Grahame Morris Portrait Grahame Morris
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I am grateful for that intervention, and of course the hon. Member is right. The new clause’s proposal is not revolutionary; it is common sense. It is joined-up Government and application of the principle of trying to ensure benefits for British-based seafarers from the growth predicted for the maritime sector, particularly in relation to zero-carbon and offshore. That is particularly important, given that the Government could seek to use clause 25 to attract more flags of convenience into the tonnage tax scheme. Tonnage tax is a tax break that has already provided £2.165 billion in relief from corporation tax for UK and international ship owners.

In truth, the new clause would be a modest change. The real measure required to boost seafarer jobs and training, including in some of our most deprived coastal communities—including mine—would be a new mandatory link to ratings training, as well as officer cadet training, as advocated by the ratings’ union, the RMT. I do not propose that, however, because that is beyond the scope of the Bill.

Amendment 34, which is linked to new clause 2, seeks to provide the Secretary of State with the power to consult maritime trade unions over compliance with environmental safety and working conditions on non-UK flagships in the tonnage tax scheme. That would be consistent with the minimum standards on seafarer safety that everyone in the House would seek to support and which are part of the maritime labour convention to which the UK Government are a signatory along with all other maritime nations. I could say a little more but time is short, so, in the interests of progress, I shall leave it at that.

Bell Ribeiro-Addy Portrait Bell Ribeiro-Addy (Streatham) (Lab)
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I rise to speak to new clause 7, on equality impact analyses. The Government’s efforts to date on equality impact assessments overall have been woeful. There should not be a need for me to speak to any detail of the new clause. We cannot talk about sexism, racism, homophobia, ableism, poverty and regional inequality properly without talking about the economy, because we know that structural inequality and discrimination hold many of our communities back. As my hon. Friend the Member for Ealing North (James Murray) said, we have a right to know exactly who benefits from the Government’s policy agenda, but their continued refusal to publish proper impact assessments for their Bills speaks for itself.

I want to emphasise how the Government and the Bill are deepening already existing inequalities. For all the talk of levelling up, the Government’s policies amount to a sharp widening of all types of inequality, which are already among the widest in western Europe.

17:45
The first and most obvious example, because it is the one that the Government make the boldest claims about, relates to geographical disparities and inequalities. The latest annual data from the ONS shows that the average household income in Kensington and Chelsea was over £63,000 a year. In Sunderland, however, it was just £16,000, and it was almost as bad in other parts of the north. I repeat that that is for entire households, not individuals. What is the Government’s response? Their response is to cut HS2; increase national insurance, which will catch the lowest paid in places such as Sunderland but leave the wealthiest residents of the royal borough unscathed; and level up spending on schools, so that pupils in the leafiest boroughs get more and inner-city pupils are even more deprived.
Ministers seem unaware that there are huge disparities within regions. It is not all rosy in the big cities either, especially in London. The average household income in Lambeth, where my constituency is, is £29,000. In Tower Hamlets it is even lower. Both figures are a tiny fraction of local house prices and there is nothing in any Government agenda for them.
Ministers also seem unaware that there is a huge increase in the exploitation of young people. A recent report from the Resolution Foundation found that one third of all those aged 24 or under returning to work in this phase of the pandemic were doing so in insecure, lower paid or zero-hours work. What is the Government’s response? It is to cut universal credit eligibility to just four weeks and to force them to take jobs where pay is lower. For good measure, they have also frozen the repayment threshold of student loans, so they will find that even a minimal pay rise is eaten into by interest payments.
Contrary to the Prime Minister’s repeated claims in this House, it is not the case that more people are now in work than prior to the pandemic. I would ask that the Prime Minister be called to correct the record, but I fear that there would never be any business done if that became the norm. According to the ONS, there were in fact 526,000 fewer people in work in November 2021 than there were in November 2019, before the pandemic began.
Specifically on women, the ONS reports that, after years of steady decline, the gender pay gap rose once more in 2021, to 7.9% for full-time employees. The Bill and the entirety of Government policy do nothing to address that. Like the employment total, it is not even certain that Ministers are aware of it. Some 3 million women are in low-paid work, compared with 1.9 million men.
LGBT communities have seen a stark rise in homelessness. Homelessness has risen overall by 165% since the Conservative party came to power. The Albert Kennedy Trust reports that 24% of young homeless people or young people at risk of homelessness are from the LGBTQ community. In the disabled community, over 40% of people with learning disabilities lost care and support over the past decade as a result of social care cuts, and the charity Scope reports that over 27% of working-age disabled people are living in poverty.
Finally, I want to discuss briefly the issues facing the black, Asian and minority ethnic community. In 2019 the UN reported that austerity had worsened racial inequality, but this is a Government who deny the very existence of institutional racism when the evidence is all around us. TUC comparisons of median pay show that there is an ethnicity pay gap of 10.13%. Those are only the figures we actually have, because ethnicity pay gap reporting is woeful and shameful. It is much, much worse than for the gender pay gap. However, we must note that during the pandemic the Government, because equality is just an add-on for them, suspended gender pay gap reporting. I would also make the point that more than half of all the UK’s black children live in poverty. That means that Government policy, in the form of high energy prices, higher national insurance or freezing income tax thresholds, disproportionately hits ethnic minority communities and people in work much harder.
The Government are not using their powers, including fiscal powers, to alleviate those inequalities; they are actually exacerbating them. It is a shameful record. The Government would do well to remember that equality is not expendable. It is not an add-on. It is not an extra. It is actually our law. If they are so certain that they are delivering for everybody in this country, I call on them to accept my new clause to show they are actually delivering for people right across the country. The fact remains that inequalities are out of control and they are doing absolutely nothing to stop that.
Nigel Evans Portrait Mr Deputy Speaker (Mr Nigel Evans)
- Hansard - - - Excerpts

Order. I can see two Members standing and I intend to call the Minister at 5.55 pm. I call you first, Mr Grant, and any time you do not use up before 5.55 can be used by your colleague—no pressure.

Peter Grant Portrait Peter Grant
- Hansard - - - Excerpts

Thank you, Mr Deputy Speaker; I am pleased to be able to make a brief contribution to tonight’s debate. I commend the three previous speakers, the hon. Members for Streatham (Bell Ribeiro-Addy), for Easington (Grahame Morris) and for Oxford West and Abingdon (Layla Moran). It is unfortunate that the very inadequate time that the programme motion allowed did not give any of them the time they deserved, given the amount of work they put into their amendments.

I mentioned new clause 3 and new schedule 2 earlier, but “schedule” is a misnomer here. We are not talking about a schedule; we are in effect talking about the “Finance No. 3 Bill”, 25 pages long and intensely complicated. This is our one and only chance to get it right and none of us can feel comfortable that it was tabled on Monday, it is being debated on Wednesday and it comes into force on Friday—not next Friday, but the previous Friday. What on earth are the Government playing at?

I do not have an issue with any of the other important business that took up today’s time—nobody could have any issue with any of that. My issue is that when the Government knew they were going to table such a substantial, technical and complicated amendment at this stage, it was up to them to amend the programme motion to give a decent amount of time, because 90 minutes for this debate is ludicrous. Only the Government had the ability to put forward a change to the programme motion; and only the Government had the opportunity to consult with Opposition parties in advance of that amendment being tabled, or indeed to discuss it with outside stakeholders. Not doing so was a failure, unless the Minister can give a very good reason as to why secrecy was so important. Springing it on the House in this way was, I believe, an abuse of the Government’s powers and shows contempt for Parliament.

The aim of the new tax is laudable and nobody would argue against it, but we have been given no indication as to why the tax is the way to prevent the kind of behaviour that we are trying to deter. It appears that it is just because they can change the tax system immediately and make it retrospective, whereas other things would take a bit longer. I ask the Government this question outright: is the urgency because they have picked up intelligence that another major player in the energy market was about to cut and run—to cash in and bail out? If they cannot answer that in public today, I would appreciate it if they contacted me after, on a guarantee of confidentiality. To be honest, I can see no other reason why there was a need for such secrecy and last-minute panic.

The amendment is restricted to energy companies, but it can also be extended to apply to any other kind of company the Treasury chooses to designate. What is that for? Can the Minister explain what other companies might need to be brought in, and in what circumstances that might need to happen? The measure is only to be in place for a year, or for such other time as the Treasury decides it wants to extend it, and it can extend it as often as it wants, although only until 2025. However, given that the Minister has said that the amendment is essentially a stopgap until Ofgem is able to amend the regulatory environment to prevent these abuses in the market, just how lacking in confidence are they of Ofgem and its ability and willingness to fix this long-standing problem if they think it might need another three years before it is fully dealt with?

Paragraph 41 of new schedule 2 gives the Government the power to change the law retrospectively. No Parliament should ever lightly agree to such a power, but tonight we have been given no choice; we simply have not had sufficient time to look at the detail of that or to get the assurances we would usually want about what that power will and will not be used for.

My hon. Friend the Member for Glasgow Central (Alison Thewliss) referred to comments from the Chartered Institute of Taxation, and the Association of Tax Technicians told me yesterday:

“We have a brand-new tax without any prior announcement, no consultation, little debate, which will be enacted before the next Budget, and will be effective from 28 January 2022. OK, these are arguably special circumstances, but is this a good way to run a tax system?”

The short answer is no, it is not.

Lucy Frazer Portrait Lucy Frazer
- Hansard - - - Excerpts

I shall endeavour to answer all the points raised swiftly, Mr Deputy Speaker.

The hon. Member for Ealing North (James Murray) began by asking in new clause 6 for us to publish a review of the impact of the amount of tax working people will be paying. He will know that we have already published the “Impact on households” document in the October Budget of 2021 and the Office for Budget Responsibility already produces fiscal forecasts. However, he used the amendment to discuss the issue more broadly, suggesting that the Government were not doing enough to help working families. That simply is not correct, and he knows it.

We have cut tax for low-income families by introducing the universal credit taper rate, saving working families £1,000 a month. The hon. Gentleman will know that we increased the rate for the national living wage, and he will know about the half a billion pounds of household support for the hardest-hit families—not to mention the significant covid support that we have given the families who have needed it over the last 18 months to two years. However, the best way to help people to have appropriate incomes to support themselves is to get them into jobs, and that is why we have spent £2 billion to get young people into the kickstart scheme, and £2.9 billion to help the 1.4 million long-term unemployed to get into jobs, ensuring that we have a lower unemployment rate than comparable countries such as Canada, France, Italy and Spain.

The hon. Member for Oxford West and Abingdon (Layla Moran) talked about the need to put more money into people’s pockets, and to support services. That is exactly what we did in the spending review, with a cash increase of £150 billion a year by 2024, the largest real-terms increase provided by any Parliament in this century. Only yesterday, I was pleased to see an announcement about levelling up education funding across the country.

The hon. Member for Ealing North mentioned the NHS and social care levy. I am proud that this Government are willing to tackle the really difficult issues that face this country. My hon. Friend the Member for North Dorset (Simon Hoare) pointed out that if we secure sufficient funds, we shall be able to tackle waiting times and have more doctors. I should point out that it was a Labour Government who, in the same way, increased national insurance contribution rates by 1% in 2003, specifically to increase NHS funding. The hon. Member also mentioned the banking surcharge, but, as was mentioned by my hon. Friend the Member for South Cambridgeshire (Anthony Browne), tax rates for banks are going not down, but up—to 28%, when they would otherwise be at 27%.

A number of Members on both sides of the House mentioned the economic crime measures in the Bill, and the beneficial ownership register. I hope that those Members were present for Prime Minister’s Question Time this afternoon and heard what the Prime Minister said, showing that we are committed to introducing this legislation. However, we have already done a significant amount to tackle economic crime. Since 2010 the Government have introduced more than 150 new measures and invested more than £2 billion in HMRC to tackle fraud. We do not want in this country money that has been gained through criminality or corruption—it is not welcome in the UK—and the international Finance Action Task Force concluded in December 2018 that we have some of the strongest controls in the world. Since then, we have strengthened those powers even further.

I will spend a couple of seconds on the new clause relating to tonnage tax, referred to by the hon. Member for Ealing North, my hon. Friend the Member for Thurrock (Jackie Doyle-Price) and the hon. Members for Glasgow Central (Alison Thewliss) and for Easington (Grahame Morris). It is important to ensure a fair wage for our seafarers, who are recognised worldwide as some of the most highly skilled. That is why, in 2020, the Government extended the minimum wage entitlement to seafarers on domestic voyages.

The Department for Transport’s “Maritime 2050” strategy shows that we want a diverse and rewarded workforce, so we will continue to engage closely with industry and trade unions to support the training and employment of both British officers and ratings. I understand that the RMT has had recent meetings with the DFT and the Maritime Skills Commission on the training of ratings and has been invited to submit its analysis to inform further discussions. I wish I had more time to deal with that matter, but I will be happy to take it up further.

On the residential property tax, the hon. Member for Ealing North will know that the Secretary of State for Levelling Up, Housing and Communities is actively working on the matter.

Climate change goals were mentioned by the hon. Member for Glasgow Central, who said that there was not enough investment in businesses to incentivise them. However, in the last financial year, we issued £16 billion-worth of green bonds and set up the UK Infrastructure Bank to invest in net zero, backed with £12 billion of capital, which will also help to unlock more than £40 billion of overall investment in infrastructure.

For all those reasons, and many others, I urge hon. Members to accept the Government amendments, but not the others.

00:06
Debate interrupted (Programme Order, 16 November).
The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83E), That the clause be read a Second time.
Question agreed to.
New clause 1 accordingly read a Second time, and added to the Bill.
The Deputy Speaker then put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83E).
New Clause 3
Public interest business protection tax
“(1) Schedule (Public interest business protection tax) makes provision about a tax charged in circumstances where a business for which there is a special administration regime becomes subject to special administration or to other special measures in connection with insolvency.
(2) In this section “special administration”, “special administration regime” and “special measures” have the meanings given by paragraph 2 of that Schedule.”—(Lucy Frazer.)
This new clause introduces NS2.
Brought up, and added to the Bill.
New Clause 17
Impact of Act on tackling climate change
“The Government must publish within 12 months of this Act coming into effect an impact assessment of the changes in the Act as a whole on the goal of tackling climate change and the UK‘s plans to reach net zero by 2050.”—(Alison Thewliss.)
Brought up.
Question put, That the clause be added to the Bill
18:01

Division 180

Ayes: 228


Labour: 169
Scottish National Party: 38
Liberal Democrat: 12
Independent: 4
Plaid Cymru: 2
Alliance: 1
Green Party: 1
Alba Party: 1

Noes: 306


Conservative: 298
Independent: 2
Democratic Unionist Party: 2

New Clause 27
Review of Economic crime (anti-money laundering) levy
‘(1) The Government must publish an impact assessment of the operation of the Economic crime (anti-money laundering) levy within six months of Royal Assent to this Act.
(2) The assessment carried out under subsection (1) must include an assessment of the contribution to the effectiveness of the levy that a register of beneficial owners of property would make.’—(Layla Moran.)
This new clause would require the Government to produce an impact assessment of the operation of the new Economic crime (anti-money laundering) levy, and assess how a register of beneficial owners of property would contribute to the effectiveness of the levy.
Brought up.
Question put, That the clause be added to the Bill.
18:14

Division 181

Ayes: 230


Labour: 167
Scottish National Party: 40
Liberal Democrat: 8
Independent: 4
Plaid Cymru: 2
Democratic Unionist Party: 2
Alliance: 1
Conservative: 1
Green Party: 1
Alba Party: 1

Noes: 301


Conservative: 293
Independent: 2

Clause 6
Rate of surcharge and surcharge allowance
Amendment proposed: 35, page 2, line 30, leave out clause 6.—(James Murray.)
Question put, That the amendment be made.
18:26

Division 182

Ayes: 228


Labour: 165
Scottish National Party: 40
Liberal Democrat: 12
Independent: 4
Plaid Cymru: 2
Democratic Unionist Party: 2
Alliance: 1
Green Party: 1
Alba Party: 1

Noes: 301


Conservative: 299
Independent: 2

Clause 36
Residential property development activities: “interest in land”
Amendments made: 1, in clause 36,  page 28, line 10, leave out “An RP developer” and insert “A company”.
This amendment (along with Amendments 2, 3 and 8) removes an unnecessary potential circularity in the meaning of an “interest in land” for the purposes of residential property developer tax.
Amendment 2, in clause 36,  page 28, line 11, leave out “RP developer” and insert “company”
See the explanatory statement for Amendment 1.
Amendment 3, in clause 36, page 28, line 16, leave out “RP developer’s” and insert “company’s”
See the explanatory statement for Amendment 1.
Amendment 4, in clause 36, page 28, line 20, leave out subsection (2)
This amendment is consequential on Amendment 5.
Amendment 5, in clause 36, page 28, line 29, at end insert—
“(3A) But where a company (C) has an interest within subsection (3)(b), that interest is not an excluded interest if it is granted as a result of arrangements to which C or a related company is party and under which an estate in the land in question is to be conveyed by another party to the arrangements at the direction or request of C or a related company to any of—
(a) a person who is not party to the arrangements,
(b) C, or
(c) a company related to C.
(3B) For the purposes of subsection (3A)—
(a) “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable);
(b) a conveyance by a person as nominee or bare trustee is to be treated as also being a conveyance by the person or persons for whom they are the nominee or trustee.
(3C) For the purposes of this section, a company (A) is related to another company (B) if—
(a) A is a member of a group of which B is a member;
(b) A is a relevant joint venture company and B, or B together with any other company which is a member of a group of which B is a member, has or have a substantial interest in A.”
This amendment provides that a licence to use or occupy land that is granted as a result of arrangements under which an estate in the land is to be conveyed, at the request of a company or related company, is not an excluded interest for the purposes of clause 36 (and, accordingly, is an interest in land for the purposes of that clause).
Amendment 6, in clause 36, page 28, line 35, at end insert—
“(4A) For the purposes of subsection (4), a licence falling within subsection (3A) to use or occupy land is to be treated as being disposed of when an estate in the land is, or would be, conveyed under the arrangements as a result of which the licence is granted.”
This amendment provides that a licence of the sort mentioned in subsection (3A) of clause 36 (inserted by Amendment 5) would form part of a company’s trading stock for the purposes of that clause.
Amendment 7, in clause 36, page 28, line 36, leave out “subsection (4)” and insert “this section”.
This amendment is consequential on Amendment 6.
Amendment 8, in clause 36, page 28, line 38, leave out “an RP developer” and insert “a company”.—(Lucy Frazer.)
See the explanatory statement for Amendment 1.
Clause 58
Assessment, payment, collection and recovery
Amendments made: 9, in clause 58, page 44, line 43, leave out “entities that are” and insert “persons”.
This amendment and Amendment 10 ensure that those liable to pay the economic crime (anti-money laundering) levy are referred to as “persons” in each place for consistency with other provisions of Part 3.
Amendment 10, in clause 58, page 45, line 9, leave out “entities” and insert “persons”.—(Lucy Frazer.)
See the explanatory statement for Amendment 9.
Clause 78
Vehicle excise duty: exemption for certain cabotage operations
Amendments made: 11, in clause 78 page 63, line 6, leave out
“period ending with 30th April 2022”
and insert “permitted period”.
See the explanatory statement for Amendment 12.
Amendment 12, in clause 78, page 63, line 23, at end insert—
“(2ZD) Paragraphs (2ZE) and (2ZF) apply in determining the “permitted period” for the purposes of paragraph (2)(c)(d)(iii).
(2ZE) In the case of vehicles arriving in the United Kingdom on or after 28th October 2021, the “permitted period” means the period ending with—
(a) 30th April 2022, or
(b) such later date as regulations made by the Treasury may specify.
(2ZF) Where regulations made by the Treasury provide for this paragraph to apply in the case of vehicles arriving in the United Kingdom on or after a date specified in the regulations that is after 30th April 2022, the “permitted period” means the period—
(a) beginning with that specified date, and
(b) ending with such later date as the regulations may specify.
(2ZG) The later date specified in regulations under paragraph (2ZE)(b) or (2ZF)(b) must be no later than 31st December 2022.
(2ZH) Regulations under paragraph (2ZE) or (2ZF) are to be made by statutory instrument.
(2ZI) A statutory instrument containing regulations under paragraph (2ZE) or (2ZF) is subject to annulment in pursuance of a resolution of the House of Commons.”
This amendment (along with Amendments 11 and 13) enables the Treasury by regulations to extend the temporary extension of cabotage rights afforded by clause 78 beyond the current end date of 30 April 2022, but any such extension must end on or before 31 December 2022.
Amendment 13, in clause 78, page 63, line 24, leave out subsection (3).—(Lucy Frazer.)
See the explanatory statement for Amendment 12.
New Schedule 1
“Freeport tax site reliefs: provision about regulations
Part 1
First-year allowance for plant and machinery
1 Part 2 of CAA 2001 (plant and machinery allowances) is amended in accordance with paragraphs 2 and 3.
2 (none) In section 45O (expenditure on plant and machinery for use in freeport tax sites), in subsection (7), for the entry relating to section 45R substitute “section 45R (effect of failing to comply with ongoing requirements) and regulations under that section, and”.
3 (1) Section 45R (effect of plant or machinery subsequently being primarily for use outside freeport tax sites) is amended as follows.
(2) In the heading, for the words from “plant” to the end substitute “failing to comply with ongoing requirements”.
(3) After subsection (3) insert—
“(3A) The Treasury may by regulations make provision adding, removing or altering, or otherwise about, circumstances in which expenditure on the provision of plant or machinery is to be treated as never having been first-year qualifying expenditure under section 45O.
(3B) The power to make regulations under subsection (3A) may be exercised only in relation to expenditure incurred on or after the date on which the regulations come into force.
(3C) Subsections (3) and (4) of section 45P apply in relation to regulations under subsection (3A) as they apply in relation to regulations under that section.”
(4) In subsection (4), at the end insert “or regulations under subsection (3A)”.
(5) In subsection (5), after “this section” insert “or of regulations under subsection (3A)”.
(6) In subsection (6), at the end insert “or of regulations under subsection (3A)”.
4 (1) Section 570B of CAA 2001 (orders and regulations made by Treasury or Commissioners) is amended as follows.
(2) In subsection (3), after “section 45P,” insert “45R,”.
(3) In subsection (4), after “section 45P” insert “, 45R”.
Part 2
Structures and buildings allowances
5 (1) Section 270BNC of CAA 2001 (structures and buildings allowances: power to amend meaning of “freeport qualifying expenditure”) is amended as follows.
(2) In the heading, at the end insert “etc”.
(3) In subsection (1)—
(a) the words from “change” to the end become paragraph (a);
(b) after that paragraph insert “, or
(b) make provision adding, removing or altering, or otherwise about, circumstances in which qualifying expenditure is to be treated as if it were—
(i) freeport qualifying expenditure, or
(ii) other qualifying expenditure,
including provision about assessments, adjustments to assessments, returns, amendments of returns and penalties.”
(4) In subsection (4)(b), after “subsection” insert “(1)(b) or”.
(5) At the end insert—
“(5) The power to make regulations under subsection (1)(b) may be exercised only in relation to qualifying expenditure incurred on or after the date on which the regulations come into force.”
Part 3
Stamp duty land tax
6 (1) In Schedule 6C to FA 2003 (stamp duty land tax: relief for freeport tax sites), paragraph 12 (power to change the cases in which relief is available) is amended as follows.
(2) In sub-paragraph (1)—
(a) at the end of paragraph (a) insert “or”;
(b) for paragraphs (b) and (c) substitute—
(b) make other provision about the availability of relief under this Schedule, including provision—
(i) adding, removing or altering, or otherwise about, conditions that must be met in order for relief to be available,
(ii) about the withdrawal of relief, or
(iii) about returns where relief is withdrawn.”
(3) In sub-paragraph (4)(b), after “on” insert “sub-paragraph (1)(b) of this paragraph or on”.
(4) At the end insert—
“(5) The power to make regulations under this paragraph may be exercised only in relation to transactions with an effective date that is on or after the date on which the regulations come into force.””—(Lucy Frazer.)
See the explanatory statement for NC1.
Brought up, and added to the Bill.
New Schedule 2
“Public interest business protection tax
Part 1
Charge
Charge on value of assets held for qualifying purposes
1 (1) Where—
(a) a person (“P”) takes disqualifying steps in relation to an asset in disqualifying circumstances, and
(b) the £100 million threshold condition is met in relation to the person (whether before, at the same time as or after those steps were taken),
P is liable to pay a tax equal to 75% of the asset’s adjusted value (see paragraph 3).
(2) The tax is to be known as public interest business protection tax and the Commissioners for Her Majesty’s Revenue and Customs are responsible for its collection and management.
(3) P takes disqualifying steps in relation to an asset in disqualifying circumstances if—
(a) it is reasonable to conclude that the asset was held by P wholly or partly for the purposes of it being used or being available for use for the benefit of a public interest business carried on by P or by a person connected to P,
(b) steps are taken by P, or by P together with others, that result in the asset not being used to some extent, or being no longer available for use to some extent, for the benefit of the business,
(c) the business becomes subject to special measures (whether before, at the same time as, or after those steps were taken),
(d) the taking of those steps materially contributes to—
(i) the business becoming subject to special measures, or
(ii) a significant increase in the costs of carrying on the business, and
(e) P was aware, or ought reasonably to have been aware, that the asset not being used, or being available for use, by the business would have the effect mentioned in paragraph (d)(i) or (ii).
(4) In this Schedule—
(a) “qualifying purposes” means the purposes described in sub-paragraph (3)(a), and
(b) “disqualifying steps” means steps described in sub-paragraph (3)(b), and steps may fall within that description whether or not—
(i) P or any other person receives any consideration in connection with, or otherwise in consequence of, the taking of the steps, or
(ii) P directly participates in all of the steps.
(5) Disqualifying steps include (for example)—
(a) one or more steps that result in the disposal of the asset where some or all of the proceeds of that disposal are (to any extent) not applied for the benefit of the public interest business (including where some of those proceeds are so applied for a time, but subsequently cease to be);
(b) one or more steps that result in the public interest business being deprived in substance of the benefit of the asset to some extent (including where the benefit of the asset is provided to the business at a greater cost to the business than would have reasonably been expected);
(c) one or more steps that facilitate a person benefiting from the asset or its disposal to the detriment of the public interest business;
(d) entering into arrangements which result in the asset no longer being held, or which result in it being held to a lesser extent, for qualifying purposes in relation to the public interest business (including arrangements that include transactions to which the person is not party);
(e) directing, encouraging or causing another person to do something which results in the asset no longer being held, or which result in it being held to a lesser extent, for qualifying purposes in relation to the public interest business.
(6) Steps taken in contemplation of the taking of disqualifying steps (which might include steps taken in relation to the residence of P) are to be treated as disqualifying steps.
(7) Where the taking of a disqualifying step was delayed by the action of a public authority, that step is to be treated as having been taken at the time at which it would, but for that action, have been taken.
(8) In determining, for the purposes of sub-paragraph (3)(d)(ii) whether there has been an increase in the costs of carrying on the public interest business—
(a) those costs are to be taken to include the costs of any person who, as a result of the special measures, takes over (in substance) the carrying on of any of the activities comprised in the carrying on of the business (such as the costs of a person to whom the customers of the business are transferred), and
(b) whether costs have increased is to be determined by reference to what the costs of carrying on the activities comprised in the carrying on of the business would have been—
(i) had those activities all been carried on by the business, and
(ii) had the asset been available for use (including its being used to avoid or offset a cost) in connection with the carrying on of those activities on the same basis it had been available before the taking of the first disqualifying step.
(9) The £100 million threshold condition is met in relation to P if the combined underlying value (as determined in accordance with paragraph 3(2) and (3)) of all assets in respect of which disqualifying steps were taken in disqualifying circumstances by P and by any person who is connected to P exceeds £100 million.
(10) In this Schedule—
“asset” includes a part of an asset;
“disposal” includes anything which would be a disposal for the purposes of TCGA 1992.
Meaning of “public interest business” and “special measures”
2 (1) For the purposes of this Schedule, a business is a “public interest business” if it is—
(a) an energy supply business, or
(b) a business of a description specified in regulations made by the Treasury.
(2) Regulations may only specify a description of business if a special administration regime exists for persons carrying on businesses of that description.
(3) For the purposes of this Schedule a business is subject to special measures if—
(a) the person carrying on the business enters special administration,
(b) it is subject to arrangements, imposed in connection with the insolvency of the person carrying it on by or under an enactment (including by virtue of any licence required by or under an enactment), for the transfer of customers of the business to another business, or
(c) such other circumstances relating to insolvency as may be specified in regulations made by the Treasury exist in relation to the business or the person carrying it on.
(4) In this paragraph—
“energy supply business” means the business of making supplies required to be authorised under—
(a) a licence granted under section 7A(1) of the Gas Act 1986 (gas supply licences), or
(b) a licence granted under section 6(1)(d) of the Electricity Act 1989 (electricity supply licences);
“special administration” means an insolvency procedure—
(a) that is similar or corresponds to ordinary administration, and
(b) under which the administrator has one or more special objectives instead of or in addition to the objectives of ordinary administration;
“special administration regime” means provision made by an enactment that provides for special administration;
“ordinary administration” means the insolvency procedure provided for by—
(a) Schedule B1 to the Insolvency Act 1986, or
(b) Schedule B1 to the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)).
Adjusted value of assets
3 (1) To determine the adjusted value of an asset, take the following steps—
Step 1 - value the asset
Determine the underlying value of the asset.
Step 2 - apply reduction to reflect potential losses as a result of taking steps
Deduct an amount equal to 10% of the underlying value from that value.
(2) The underlying value of the asset is the greater of—
(a) the fair value of the asset immediately before the first disqualifying step was taken in relation to it, and
(b) the amount or value of any consideration paid directly or indirectly in connection with, or otherwise in consequence of, the taking of the disqualifying steps (whether paid to the person taking them or to any other person).
(3) Where it is reasonable to conclude that an asset was held partly for qualifying purposes in relation to the public interest business in question and partly for other purposes, reduce the underlying value so that it reflects the proportion of the asset that can be attributed (on a just and reasonable basis) to its being held for qualifying purposes in relation to the business.
Part 2
Joint and several liability
Liability of associated companies
4 (1) This paragraph applies to any company, other than a company that is subject to special measures, that was associated, at any point during the disqualifying period, with a company (“the principal taxpayer”) that is liable to public interest business protection tax as a result of paragraph 1.
(2) A company is associated with another if—
(a) one of the two has control of the other, or
(b) both are under the control of the same person or persons.
(3) A company to which this paragraph applies is, together with the principal taxpayer, jointly and severally liable to public interest business protection tax.
(4) In this Schedule the “disqualifying period” means the period commencing with the day on which the first disqualifying step was taken and ending with the last day of the period in which the principal taxpayer must make a return under paragraph 8(1).
Joint and several liability of connected persons and others who may benefit
5 (1) This paragraph applies to a person (“R”) and any person connected to R if—
(a) R or a person connected to R receives the proceeds (whether directly or indirectly) of any consideration paid directly or indirectly in connection with, or otherwise in consequence of, the taking of disqualifying steps by a person liable to public interest business protection tax as a result of paragraph 1 (“the principal taxpayer”), and
(b) the sum of amounts received by R and persons connected to R is equal to or exceeds 5% of the adjusted value of the asset.
(2) This paragraph also applies to a person (“S”) and any person connected to S if—
(a) S or a person connected to S had a qualifying interest in a company, partnership or unincorporated association liable to public interest business protection tax as a result of paragraph 1 (“the principal taxpayer”) during the disqualifying period, and
(b) the sum of qualifying interests S and persons connected to S had in the principal taxpayer during that period was equal to or exceeded 5% (see paragraph 6(1) which defines “qualifying interest” as a proportion).
(3) This paragraph does not apply to a person if the person is liable to tax as a result of paragraph 4 in relation to the same asset.
(4) A person to whom this paragraph applies is, together with the principal taxpayer, jointly and severally liable to public interest business protection tax.
(5) But the liability of a person liable to tax as a result of this paragraph is limited to—
(a) in the case of a person to whom this paragraph applies only as a result of sub-paragraph (1), the amount equal to the sum of the proceeds of consideration received (directly or indirectly) by R and persons connected to R,
(b) in the case of a person to whom this paragraph applies only as a result of sub-paragraph (2), the amount equal to the proportion of the principal taxpayer’s liability that is the same as the sum of qualifying interests S and persons connected to S had during the disqualifying period, and
(c) in the case of a person to whom this paragraph applies as a result of both sub-paragraphs (1) and (2), the greater of the amounts described in paragraphs (a) and (b).
(6) References in this paragraph to the receipt of the proceeds of consideration do not include the receipt of any amount pursuant to a loan if—
(a) the parties to that loan are not connected,
(b) the creditor carries on a business of lending money,
(c) the loan was made by the creditor in the ordinary course of that business, and
(d) the terms of the loan were agreed between parties dealing at arm’s length.
Qualifying interests in company, partnership or unincorporated association
6 (1) A person (“the qualifying person”) had a qualifying interest in a company, partnership or unincorporated association liable to tax (“the taxed entity”) during the disqualifying period if at any point during the period—
(a) the qualifying person was beneficially entitled to a proportion of the profits available for distribution to equity holders of the taxed entity, or
(b) the qualifying person was beneficially entitled to a proportion of the assets of the taxed entity for distribution to its equity holders on a winding up,
and the qualifying interest of the person is, for the purposes of paragraph 5(2)(b) and (5)(b), to be treated as the greatest of the proportions that applied at any point during the period.
(2) Chapter 6 of Part 5 of CTA 2010 applies for the purposes of determining the proportions of profits or assets of the taxed entity that the qualifying person is beneficially entitled to as it applies for the purposes of determining the proportions of profits or assets of a company that another company is beneficially entitled to (see, in particular, sections 165 and 166 of that Act).
(3) That Chapter has effect for the purposes of sub-paragraph (1) as if—
(a) in sections 170(3) and 172(3) (shares or securities with limited or temporary rights), for “less than” there were substituted “more than”,
(b) in section 174 (option arrangements)—
(i) in subsection (1), in Step 4, for “lowest proportion” there were substituted “highest proportion”, and
(ii) in subsection (2), for “less than” there were substituted “more than”,
(c) in sections 175(3), 176(3), 177(3) and 178(3) (cases in which more than one of sections 170, 172, and 174 apply), for “lowest proportion” there were substituted “highest proportion”, and
(d) sections 179 to 182 were omitted.
(4) That Chapter is to be read, for those purposes, with all modifications necessary to ensure that—
(a) it applies to a company which does not have share capital or to a partnership or unincorporated association, and to holders of corresponding ordinary holdings in such a company, partnership or unincorporated association, in a way which corresponds to the way they apply to companies with ordinary share capital and holders of ordinary shares in such companies,
(b) it applies in relation to ownership through any trust or other arrangement, in a way which corresponds to the way it applies to ownership through a company, and
(c) for the purposes of achieving paragraphs (a) and (b), profits or assets are attributed to holders of corresponding ordinary holdings in partnerships, unincorporated associations, trusts or other arrangements in a manner which corresponds to the way profits or assets are attributed to holders of ordinary shares in a company which is a body corporate.
(5) In this paragraph “corresponding ordinary holding” means a holding or interest which provides the holder with economic rights corresponding to those provided by a holding of ordinary shares.
Claim for relief
7 (1) This paragraph applies to a person who is liable to tax as a result of paragraph 5 if the person can demonstrate that the potential benefit to the person in connection with the taking of disqualifying steps is less than the amount to which the person would otherwise be liable to tax.
(2) References in this paragraph to the potential benefit to the person are to the maximum amount or value by which the person has or could have benefitted, or could benefit, in connection with the taking of those steps, which may (for example) include by—
(a) receiving, or being entitled (whether absolutely or conditionally) to receive, any amount in connection with the taking of the steps;
(b) being entitled (whether absolutely or conditionally) to any assets, or distribution out of assets, whose value is affected by the taking of the steps;
(c) being a person in respect of whom a power or other discretion may be exercised resulting in the receipt of any such amount, assets or distribution;
(d) disposing of, or being able to dispose of, any such assets.
(3) A person to whom this paragraph applies may make a claim to an officer of Revenue and Customs for relief by way of a reduction of the amount to which the person is liable to secure that the amount does not exceed the potential benefit to the person.
(4) No account is to be taken in a claim under this paragraph of—
(a) any amount of costs that may be incurred in connection with the realisation of a potential benefit unless that amount has been paid before making the claim, or
(b) any losses associated with the taking of the disqualifying steps (as the underlying tax has already been reduced as a result of the application of step 2 in paragraph 3(1)).
(5) An officer of Revenue and Customs to whom a claim is made under this paragraph must determine the claim and make so much (if any) of the reduction claimed as the officer considers is just and reasonable.
(6) A reduction may be made by way of an assessment or the modification of an assessment, or otherwise.
(7) The officer must notify their determination of the claim to the person making it.
(8) A person who has made a claim under this paragraph that has not been determined by an officer of Revenue and Customs may apply to the tribunal for a direction requiring an officer of Revenue and Customs to make that determination within a specified period.
(9) Any such application is subject to the relevant provisions of Part 5 of TMA 1970 (see, in particular, section 48(2)(b) of that Act).
(10) The tribunal must give the direction applied for unless satisfied that there are reasonable grounds for not determining the claim within a specified period.
Part 3
Administration
Requirement to file return and pay tax chargeable under paragraph 1
8 (1) A person liable to tax as a result of paragraph 1 must make and deliver a return to an officer of Revenue and Customs before the end of the period of 30 days beginning with later of—
(a) the day on which the person became liable,
(b) the day on which the public interest business to which the tax relates entered special measures,
(c) the day on which the £100 million threshold condition is met (see paragraph 1(9)), and
(d) the day on which this Act is passed.
(2) References in this Schedule to the day on which a person became liable to tax as a result of paragraph 1 (however framed) are to the date on which the first of the disqualifying steps to which the tax relates was taken.
(3) A return under this paragraph must contain—
(a) such information, accounts, statements and documents as are relevant to the person’s liability to tax, and
(b) an assessment of the amount (a “self-assessment”), on the basis of the information contained in the return, the person is liable to pay.
(4) The Commissioners for Her Majesty’s Revenue and Customs may by notice, published by the Commissioners in such manner as they consider appropriate, specify descriptions of information, accounts and documents that are relevant to a person’s liability to tax (and which accordingly must be contained in a return).
(5) A self-assessment may not be made and delivered under this paragraph after the end of the period of 4 years beginning with the day on which the person became liable to tax.
(6) Where a return is made under this paragraph, the amount assessed is payable on the day after the end of the period of 15 days beginning with the day after the end of the period referred to in sub-paragraph (1).
Notice to file return in respect of joint and several liability under paragraph 4 or 5
9 (1) An officer of Revenue and Customs may by notice require a person liable to public interest business protection tax as a result of paragraph 4 or 5—
(a) to make and deliver to the officer a return containing such information as may reasonably be required in pursuance of the notice, and
(b) to deliver with the return such accounts, statements and documents, relating to information contained in the return as may reasonably be so required.
(2) A notice may only be given to a person under this paragraph if the officer considers that there is a risk that the full amount of tax due from the principal taxpayer (see paragraphs 4 and 5) will not be recovered from the principal taxpayer.
(3) A notice under this paragraph must state the amount the officer determines is the liability of the principal taxpayer.
(4) A return required as a result of a notice given under this paragraph must contain an assessment of the amount (a “self-assessment”), on the basis of the information contained in the return and the amount stated in the notice in accordance with sub-paragraph (3), the person is liable to pay.
(5) A return required as a result of a notice given under this paragraph must be made and delivered before the end of the period of 30 days beginning with the day on which the notice was given.
(6) A person who has paid an amount of tax under or in pursuance of a notice under this paragraph may recover that amount from the principal taxpayer.
(7) Where a return is made under this paragraph, the amount assessed is payable on the day after the end of the period of 45 days beginning with the day on which the notice to which it relates was given.
Time limits in relation to assessment under paragraph 9
10 (1) A notice under paragraph 9(1) may not be given after the end of the period of 3 years beginning with the latest date provided for by whichever of sub-paragraphs (2), (3) and (4) apply.
(2) Where the liability of the principal taxpayer is determined under paragraph 12(1) (HMRC to determine tax where no return made in time), the date provided for by this sub-paragraph is the date on which the determination was made.
(3) Where a return has been made by the principal taxpayer, including where the return supersedes a determination under paragraph 12(1), the date provided for by this sub-paragraph is the latest of—
(a) the last date on which notice of enquiry (see paragraph 13) may be given in relation to the return,
(b) if a notice of enquiry is given, 30 days after the closure notice is issued,
(c) if an appeal is brought against any conclusion stated or amendment made by the closure notice, 30 days after the appeal is finally determined.
(4) Where a discovery assessment (see paragraph 18) is made in relation to the liability of the principal taxpayer, the date provided for by this sub-paragraph is—
(a) where there is no appeal against the assessment, the date when the tax becomes due and payable, and
(b) where there is such an appeal, the date on which the appeal is finally determined.
(5) A self-assessment may not be made and delivered under paragraph 9 after the later of the end of the period of—
(a) 3 years beginning with the latest date provided for by whichever of sub-paragraphs (2), (3) or (4) applies, and
(b) 3 months beginning with the day on which the notice was given.
Amendments and corrections of return
11 (1) A person who makes a return under paragraph 8 or 9 may amend that return by notice to an officer of Revenue and Customs.
(2) An amendment under sub-paragraph (1) may not be made more than twelve months after the end of the period in which the return must be delivered (see paragraphs 8(1) and 9(5)).
(3) An officer of Revenue and Customs may amend a return under paragraph 8 or 9 so as to correct—
(a) obvious errors or omissions in the return (whether errors of principle, arithmetical mistakes or otherwise), and
(b) anything else in the return that the officer has reason to believe is incorrect in the light of information available to the officer.
(4) A correction under sub-paragraph (3) is made by notice to the person whose return it is.
(5) No such correction may be made more than nine months after—
(a) the day on which the return was delivered, or
(b) if the correction is required in consequence of an amendment of the return under sub-paragraph (1), the day on which that amendment was made.
(6) A correction under sub-paragraph (3) is of no effect if the person whose return it is gives notice rejecting the correction.
(7) A notice under sub-paragraph (6) must be given—
(a) to the officer who gave the notice under sub-paragraph (4), and
(b) before the end of the period of 30 days beginning with the day on which the notice under sub-paragraph (4) was issued.
HMRC to determine tax where no return made in time
12 (1) Where a person required to make a return as a result of paragraph 8 or 9 has not delivered that return, an officer of Revenue and Customs may determine to the best of the officer’s information and belief the amount of tax payable by the person.
(2) The power to make a determination under this paragraph becomes exercisable if no return is delivered before the end of the period in which the return must be delivered.
(3) The officer must give notice of a determination under this paragraph to the person, and that notice must state the date on which the determination is issued.
(4) A determination under this paragraph is to have effect as if it were a self-assessment contained in a return under (as the case may be) paragraph 8 or 9.
(5) But if a return is subsequently made containing a self-assessment of the tax, that determination is superseded by the self-assessment provided that return is made and delivered—
(a) no more than 12 months after the date of the determination, and
(b) no later than the end of the period within which a self-assessment may be made as a result of paragraph 8(5) or 10(5) (as the case may be).
(6) Where—
(a) proceedings have been commenced for the recovery of any tax charged by a determination under this paragraph, and
(b) before those proceedings are concluded, the determination is superseded by an assessment as a result of sub-paragraph (5),
those proceedings may be continued as if they were proceedings for the recovery of so much of the tax charged by the self-assessment as is due and payable and has not been paid.
(7) No determination under this paragraph may be made after—
(a) in the case of a determination in relation to a person required to make a return under paragraph 8, the end of the period of 4 years beginning with the day on which the person became liable to tax, or
(b) in the case of a determination in relation to a person required to make a return under paragraph 9, the end of the period referred to in paragraph 10(1).
(8) Where a determination is made under this paragraph, the amount determined is payable on the day after the end of the 14 day period beginning with the day on which an officer of Revenue and Customs notifies the person of the determination.
Enquiry into return
13 (1) An officer of Revenue and Customs may enquire into a return under paragraph 8 or 9 if the officer gives notice that the officer intends to do so (a “notice of enquiry”) to the person whose return it is (“the taxpayer”).
(2) The normal rule is that a notice of enquiry may only be given up to the end of the period of twelve months after the day on which the return was delivered.
(3) But if the taxpayer has amended the return under paragraph 11(1), a notice of enquiry may be given up to the end of the period of twelve months after the amendment was made.
(4) A return which has been the subject of one notice of enquiry may not be the subject of another.
(5) An enquiry extends to anything contained in the return, or required to be contained in the return, subject to the following limitations.
(6) Where a notice of enquiry is given as a result of an amendment of the return under paragraph 11(1) and that notice is given—
(a) after the end of the period referred to in sub-paragraph (2), or
(b) after a closure notice has been issued in relation to an enquiry into the return,
the enquiry into the return is limited to matters to which the amendment relates or which are affected by the amendment.
Completion of enquiry
14 (1) The enquiry is completed when an officer of Revenue and Customs informs the taxpayer by notice (“a closure notice”) that the officer’s enquiries have been completed.
(2) A closure notice must state the officer’s conclusions and—
(a) state that in the officer’s opinion no amendment of the return is required, or
(b) make the amendments of the return required to give effect to the officer’s conclusions.
(3) A closure notice takes effect when it is issued.
(4) The taxpayer may apply to the tribunal for a direction requiring an officer of the Board to issue a closure notice within a specified period.
(5) Any such application is subject to the relevant provisions of Part 5 of TMA 1970 (see, in particular, section 48(2)(b) of that Act).
(6) The tribunal must give the direction applied for unless satisfied that there are reasonable grounds for not issuing the closure notice within a specified period.
Amendment of return by taxpayer during enquiry
15 (1) This paragraph applies if a return is amended under paragraph 11(1) at a time when an enquiry into the return is in progress in relation to any matter to which the amendment relates or which is affected by the amendment.
(2) The amendment does not restrict the scope of the enquiry but may be taken into account (together with any matters arising) in the enquiry.
(3) So far as the amendment affects the amount stated in the self-assessment included in the return as the amount of tax payable, it does not take effect while the enquiry is in progress in relation to any matter to which the amendment relates or which is affected by the amendment.
(4) If an officer of Revenue and Customs states in a closure notice that the officer has taken account of the amendment and that—
(a) the amendment has been taken into account in formulating the amendments contained in the notice, or
(b) the officer has concluded that the amendment is incorrect,
the amendment does not take effect.
(5) Otherwise, the amendment takes effect when a closure notice is issued.
(6) For the purposes of this paragraph and paragraph 16, the period during which an enquiry is in progress in relation to any matter is the whole of the period—
(a) beginning with the day on which notice of enquiry is given, and
(b) ending with the day on which a closure notice is issued.
Amendment of return during enquiry by HMRC to prevent loss of tax
16 (1) This paragraph applies where an enquiry into a return is in progress in relation to any matter.
(2) If the officer forms the opinion—
(a) that the amount stated in the self-assessment contained in the return as the amount of tax payable is insufficient, and
(b) that unless the self-assessment is immediately amended there is likely to be a loss of tax to the Crown,
the officer may by notice to the taxpayer amend the self-assessment to make good the deficiency so far as it relates to the matter.
(3) In the case of an enquiry which, as a result of paragraph 13(6), is limited to matters arising from an amendment of the return, sub-paragraph (2) only applies so far as the deficiency is attributable to the amendment.
Date by which payment to be made after amendment or correction of self-assessment
17 Paragraphs 2 to 5 of Schedule 3ZA to TMA 1970 apply for the purpose of determining when an amount of tax is payable or repayable as a result of an amendment or correction of a self-assessment under this Schedule as if—
(a) the reference in paragraph 2(1) of that Schedule to section 9ZA of that Act were to paragraph 11(1) of this Schedule,
(b) in paragraph 2(3) of that Schedule—
(i) the reference to section 9B(3) of that Act were to paragraph 15(3) of this Schedule,
(ii) the reference to section 9B(3)(a)(i) of that Act were to paragraph 15(4)(a) of this Schedule, and
(iii) the reference to section 9B(3)(b) of that Act were to paragraph 15(5) of this Schedule,
(c) in paragraph 2(4) of that Schedule—
(i) in paragraph (a), for “partial or final closure notice” there were substituted “closure notice”, and
(ii) for paragraph (b) there were substituted—
(d) the reference in paragraph 3(1) of that Schedule to section 9ZB of that Act were to paragraph 11(3) of this Schedule,
(e) the reference in paragraph 4(1) of that Schedule to section 9C of that Act were to paragraph 16 of this Schedule, and
(f) the reference in paragraph 5(1) of that Schedule to section 28A of that Act were to paragraph 14 of this Schedule.
Discovery assessment
18 (1) If an officer of Revenue and Customs discovers—
(a) that a person who ought to have been assessed to tax has not been assessed to tax,
(b) that an assessment to tax is or has become insufficient, or
(c) that any relief from tax which has been given is or has become excessive,
the officer may make an assessment (a “discovery assessment”) in the amount, or the further amount, which ought in the officer’s opinion to be charged in order to make good to the Crown the loss of tax.
(2) Where a person has made and delivered a return under paragraph 8 or 9 a discovery assessment may not be made in respect of the tax to which the return relates unless condition A or B is met.
(3) Condition A is that the situation mentioned in sub-paragraph (1) was brought about carelessly or deliberately by the person or a person acting on that person’s behalf.
(4) Condition B is that at the time when an officer of Revenue and Customs—
(a) ceased to be entitled to give a notice of enquiry to the person, or
(b) in a case where a notice of enquiry was given in relation to the return, issued a closure notice,
the officer could not have been reasonably expected, on the basis of the information made available to the officer before that time, to be aware of the situation mentioned in sub-paragraph (1).
(5) For the purposes of sub-paragraph (4), information is made available to an officer of Revenue and Customs if—
(a) it is contained in the person’s return under paragraph 8 or 9, or in any accounts, statements or documents accompanying the return;
(b) it is contained in any claim made under this Schedule by the person, or in any accounts, statements or documents accompanying any such claim;
(c) it is contained in any documents, accounts or particulars which, for the purposes of any enquiries into the return or any such claim by an officer of Revenue and Customs, are produced or furnished by the person to the officer;
(d) it is information the existence of which, and the relevance of which as regards the situation mentioned in sub-paragraph (1)—
(i) could reasonably be expected to be inferred by an officer of Revenue and Customs from information falling within paragraphs (a) to (c), or
(ii) are notified in writing by the person to an officer of Revenue and Customs.
(6) An objection to the making of an assessment under this paragraph on the ground that neither condition A nor B is fulfilled may only be made on an appeal against the assessment.
(7) Where an amount of tax is assessed under this paragraph, that amount is payable on the day after the end of the 14 day period beginning with the day on which the notice of assessment is issued.
Assessment procedure
19 (1) Notice of an assessment to tax on a person must be served on the person stating—
(a) the date on which the notice is issued, and
(b) the time within which any appeal against the assessment may be made.
(2) After that notice has been served on the person, the assessment may not be altered except in accordance with any express provision of this Schedule or of any provision of the Taxes Acts that applies to public interest business protection tax.
Time limits for assessments
20 (1) The normal rule is that an assessment of a person to tax (other than a self-assessment) may be made at any time within the period of 4 years beginning with the day (“the relevant day”) after the end of the period in which the person was required to make and deliver a return.
(2) But an assessment on a person in a case involving a loss of public interest business protection tax brought about carelessly by the person may be made at any time within the period of 6 years beginning with the relevant day.
(3) And an assessment on a person in a case involving a loss of public interest business protection tax brought about deliberately by the person may be made at any time within the period of 20 years beginning with the relevant day.
Appeals
21 (1) An appeal may be brought against—
(a) any amendment of a self-assessment under paragraph 16 (amendment by HMRC during enquiry to prevent loss of tax),
(b) any conclusion stated or amendment made by a closure notice, or
(c) any assessment to tax which is not a self-assessment.
(2) An appeal may also be brought against a determination by an officer of Revenue and Customs of a claim for a reduction under paragraph 7, but only on the ground that it was not open to the officer to consider the reduction determined by the officer (including a determination not to make any reduction) was just and reasonable.
(3) Sections 47C to 57 of TMA 1970 (appeals) apply (subject to the other provisions of this Schedule) to an appeal under this paragraph as they apply to an appeal under the Taxes Acts.
(4) But in the case of section 55 (recovery of tax not postponed), that section has effect as if—
(a) in subsection (1) for paragraphs (a) and (aa) there were substituted—
“(a) an amendment of a self-assessment under paragraph 16 of Schedule (Public interest business protection tax) to the Finance Act 2022,
(aa) a conclusion stated or an amendment made by a closure notice,”,
(b) after subsection (3) there were inserted—
“(3ZA) But the payment of any amount of public interest business protection tax is not to be postponed unless HMRC or the tribunal (as the case may be) determines that the circumstances of the appellant are exceptional such that it would not be just to refuse postponement of the payment of that amount.”, and
(c) in subsection (6), after “overcharged to tax” there were inserted “to the extent the postponement of the amount is not prevented by subsection (3ZA)”.
(5) If an appeal under sub-paragraph (1)(a) against an amendment of a self-assessment is made while an enquiry is in progress in relation to any matter to which the amendment relates or which is affected by the amendment none of the steps mentioned in section 49A(2)(a) to (c) of TMA 1970 may be taken in relation to the appeal until a closure notice is issued.
(6) Notice of an appeal must—
(a) be given in writing;
(b) specify the grounds of appeal;
(c) be given within 30 days after the specified date to the relevant officer of Revenue and Customs.
(7) In relation to an appeal under sub-paragraph (1)(a)—
(a) the specified date is the date on which the notice of amendment was issued, and
(b) the relevant officer of Revenue and Customs is the officer by whom the notice of amendment was given.
(8) In relation to an appeal under sub-paragraph (1)(b)—
(a) the specified date is the date on which the closure notice was issued, and
(b) the relevant officer of Revenue and Customs is the officer by whom that notice was given.
(9) In relation to an appeal under sub-paragraph (1)(c)—
(a) the specified date is the date on which the notice of assessment was issued, and
(b) the relevant officer of Revenue and Customs is the officer by whom the notice of assessment was given.
(10) In relation to an appeal under sub-paragraph (2)—
(a) the specified date is the date on which the notice under paragraph 7(7) was issued, and
(b) the relevant officer of Revenue and Customs is the officer by whom that notice was given.
Duty to preserve records
22 (1) A person liable to tax must—
(a) keep such records as may be needed to enable the person to deliver a correct and complete return in respect of the tax, and
(b) preserve those records in accordance with this paragraph.
(2) The records must be preserved until the end of the relevant day.
(3) In this paragraph “relevant day” means–
(a) in relation to a person liable to tax as a result of paragraph 1, the later of—
(i) the sixth anniversary of the day on which the person became liable to tax,
(ii) the day on which any enquiry into a return made and delivered by the person is completed, and
(iii) the day on which an officer of Revenue and Customs no longer has power to enquire into such a return,
(b) in relation to a person liable to tax as a result of paragraph 4 or 5, the later of—
(i) the sixth anniversary of the day on which the person was given a notice under paragraph 9(1),
(ii) the day on which an officer of Revenue and Customs no longer has power to give such a notice (see paragraph 10(1)),
(iii) the day on which any enquiry into a return made and delivered by the person is completed, and
(iv) the day on which an officer of Revenue and Customs no longer has power to enquire into such a return, and
(c) such earlier day as may be specified in writing by the Commissioners for Her Majesty’s Revenue and Customs (and different days may be specified for different cases).
(4) The Commissioners for Her Majesty’s Revenue and Customs may by regulations—
(a) provide that the records required to be kept and preserved under this paragraph include, or do not include, records specified in the regulations, and
(b) provide that those records include supporting documents (including accounts, books, deeds, contracts, vouchers and receipts) so specified.
(5) Regulations under this paragraph may—
(a) make different provision for different cases, and
(b) make provision by reference to things specified in a notice published by the Commissioners for Her Majesty’s Revenue and Customs in accordance with the regulations (and not withdrawn by a subsequent notice).
(6) The duty under this paragraph to preserve records may be discharged—
(a) by preserving them in any form and by any means, or
(b) by preserving the information contained in them in any form and by any means,
subject to any conditions or exceptions specified in writing by the Commissioners for Her Majesty’s Revenue and Customs.
(7) A person who fails to comply with this paragraph is liable to a penalty not exceeding £3,000.
(8) But no penalty is incurred if the records which the person fails to keep or preserve are records which might have been needed only for the purposes of a claim under this Schedule.
(9) Sections 100 to 103 of TMA 1970 apply to a penalty under this paragraph as they apply to a penalty under a provision of the Taxes Acts to which those sections apply.
Collection and recovery
23 Part 6 of TMA 1970 applies to public interest business protection tax as it applies to tax within the meaning of that Act as if in section 69(1) (recovery of penalty or interest), before paragraph (c) there were inserted—
“(ba) penalties imposed under paragraph 56 to the Finance Act 2009 as a result of the modifications made by paragraph 28 of Schedule (Public interest business protection tax) to the Finance Act 2022;”.
Overpaid tax
24 (1) Paragraphs 51 to 51G of Schedule 18 to FA 1998 (overpaid tax) apply, as those provisions apply in relation to a claim for repayment or discharge of corporation tax, for the purposes of making a claim for repayment or discharge of an amount of public interest business protection tax (an “overpayment claim”) where the person believes the tax is not due.
(2) Those provisions have effect for the purposes of an overpayment claim as if—
(a) in paragraph 51—
(i) in sub-paragraph (4), the reference to Part 7 of Schedule 18 to FA 1998 were to paragraph 25 of this Schedule, and
(ii) in sub-paragraph (6), for paragraph (a) and (b) there were substituted—
(b) in paragraph 51A(3), for “the Corporation Tax Acts” there were substituted “—
(a) provision made by or under Schedule (Public interest business protection tax) to the Finance Act 2022, or
(b) provision having effect for the purposes of public interest business protection tax as a result of provision made by or under that Schedule”,
(c) in paragraph 51B—
(i) in sub-paragraph (1), for “more than 4 years after the end of the relevant accounting period” there were substituted “after the last day on which a self-assessment may be made and delivered in relation to the tax (see paragraphs 8(5) and 10(5) of Schedule (Public interest business protection tax) to the Finance Act 2022)”,
(ii) sub-paragraphs (2) and (3) were omitted, and
(iii) in sub-paragraph (4), for “company tax return” there were substituted “return under paragraph 8 or 9 of Schedule (Public interest business protection tax) to the Finance Act 2022”,
(d) in paragraph 51BA(1)—
(i) in paragraph (a), for “paragraph 36 or 37” there were substituted “paragraph 12 of Schedule (Public interest business protection tax) to the Finance Act 2022”, and
(ii) in paragraph (b) for sub-paragraph (iii) there were substituted—the last day on which a self-assessment may be made and delivered in relation to the tax (see paragraphs 8(5) and 10(5) of Schedule (Public interest business protection tax) to the Finance Act 2022) has passed, and”,
(e) paragraphs 51C and 51D were omitted,
(f) in paragraph 51E—
(i) references to a discovery assessment were to a discovery assessment under this Schedule (see paragraph 18),
(ii) references to a discovery determination were omitted, and
(iii) in sub-paragraph (2)(a), for “restrictions in paragraphs 42 to 45” there were substituted “restriction in paragraph 18(2) of Schedule (Public interest business protection tax) to the Finance Act 2022,
(g) paragraph 51F were omitted, and
(h) in paragraph 51G—
(i) in sub-paragraph (1), for “company” there were substituted “person”, and
(ii) in sub-paragraph (3)(c), the reference to paragraph 51F(1)(b) were omitted.
Claims under this Schedule
25 (1) A claim under paragraph 7 or 24 (for relief from, or repayment or discharge of, tax) must be for an amount which is quantified at the time when the claim is made.
(2) A claim must be made within 4 years from the day on which the person whose claim it is became liable to the tax to which the claim relates.
(3) A person who has made a claim under this Schedule and subsequently discovers that a mistake has been made in it may make a supplementary claim within the time allowed for making the original claim.
(4) Paragraphs 2 and 2A of Schedule 1A to TMA 1970 (making of claims and keeping and preserving of records) apply to a claim under paragraph 7 of this Schedule but as if in paragraph 2A of that Schedule—
(a) in sub-paragraph (1) “in relation to a year of assessment or other period” were omitted, and
(b) the relevant day for the purposes of that sub-paragraph were the day on which an officer of Revenue and Customs has issued a notice under paragraph 7(7) of this Schedule in relation to the claim.
(5) Schedule 1A to TMA 1970 (claims etc not included in returns) applies to a claim under paragraph 24 of this Schedule but as if in paragraph 2A(1) of that Schedule “in relation to a year of assessment or other period” were omitted.
Penalty for failure to submit return
26 (1) Schedule 55 to FA 2009 (penalty for failure to make returns) has effect with the following modifications.
(2) Paragraph 1(2) of that Schedule has effect as if for the words before paragraph (a) there were substituted “Paragraphs 2 to 13P set out—”.
(3) The Table in that paragraph has effect as if at the end there were inserted—

“30

Public interest business protection tax

(a) Return under paragraph 8 or 9 of Schedule (Public interest business protection tax) to FA 2022

(b) Accounts, statement or document required under either of those paragraphs.”

(4) That Schedule has effect as if before paragraph 14 there were inserted—
Amount of penalty: public interest business protection tax
13K Paragraphs 13L to 13P apply in the case of a return falling within item 30 in the Table.
13L P is liable to a penalty under this paragraph of £10,000.
13M (1) P is liable to a penalty under this paragraph if (and only if) P’s failure continues after the end of the period of 30 days beginning with the penalty date.
(2) The penalty under this paragraph is £10,000.
13N (1) P is liable to a penalty under this paragraph if (and only if) P’s failure continues after the end of the period of 3 months beginning with the penalty date.
(2) The penalty under this paragraph is 10% of any liability to tax which would have been shown in the return in question.
13O (1) P is liable to a penalty under this paragraph if (and only if) P’s failure continues after the end of the period of 6 months beginning with the penalty date.
(2) The penalty under this paragraph is 10% of any liability to tax which would have been shown in the return in question.
13P (1) P is liable to a penalty under this paragraph if (and only if) P’s failure continues after the end of the period of 12 months beginning with the penalty date.
(2) Where, by failing to make the return, P withholds information which would enable or assist HMRC to assess P’s liability to tax, the penalty under this paragraph is determined in accordance with sub-paragraphs (3) and (4).
(3) If the withholding of the information is deliberate and concealed, the penalty is 100% of any liability to tax which would have been shown in the return in question.
(4) If the withholding of the information is deliberate but not concealed, the penalty is 70% of any liability to tax which would have been shown in the return in question.
(5) In any other case, the penalty under this paragraph is 10% of any liability to tax which would have been shown in the return in question.”
Penalties for errors
27 Schedule 24 to FA 2007 has effect as if in the Table in paragraph 1 after the entry for “Machine games duty” there were inserted—

“Public interest business protection tax

Return under paragraph 8 or 9 of Schedule (Public interest business protection tax) to FA 2022.

“Public interest business protection tax

Return, statement or declaration in connection with a claim for a relief

“Public interest business protection tax

Accounts in connection with ascertaining liability to tax.”

Failure to pay public interest business protection tax on time
28 Schedule 56 to FA 2009 has effect as if in the Table in paragraph 1 of that Schedule, after the entry for item 1A there were inserted—

“1B

Public interest business protection tax

Amount payable under paragraph 8(6) of Schedule (Public interest business protection tax) to FA 2022

The date falling 30 days after the date specified in that paragraph as the date by which the amount must be paid

1C

Public interest business protection tax

Amount payable under paragraph 9(7) of Schedule (Public interest business protection tax) to FA 2022

The date falling 30 days after the date specified in that paragraph as the date by which the amount must be paid

1D

Public interest business protection tax

Amount payable under paragraph 12(8) of Schedule (Public interest business protection tax) to FA 2022

The date falling 30 days after the date specified in that paragraph as the date by which the amount must be paid.”

Interest
29 Sections 101 to 103 of FA 2009 (interest) come into force on 6 April 2021 in relation to amounts payable or paid to Her Majesty‘s Revenue and Customs as a result of provision made by this Schedule.
Application of information, inspection and data-gathering powers
30 (1) Schedule 36 to FA 2008 (information and inspection powers) has effect as if, in paragraph 63(1) of that Schedule (meaning of “tax” for the purposes of that Schedule), after paragraph (c) there were inserted—
“(cza) public interest business protection tax,”.
(2) Schedule 23 to FA 2011 (data-gathering powers) has effect as if, in paragraph 45(1) of that Schedule (meaning of “tax” for the purposes of that Schedule), after paragraph (c) there were inserted—
“(cza) public interest business protection tax,”.
Documents
31 (1) Section 115 of TMA 1970 applies to documents to be given, sent, served or delivered under provision made by or under this Schedule as it applies to documents to be given, sent, served or delivered under the Taxes Acts.
(2) The Income and Corporation Taxes (Electronic Communications) Regulations 2003 (S.I. 2003/282) have effect as if, in regulation 2(1)(a)—
(a) the “or” and the end of paragraph (vi) were omitted,
(b) for the “; and” at the end of paragraph (vii) there were substituted “, or”, and
(c) after that paragraph there were inserted—
(i) Schedule (Public interest business protection tax) to the Finance Act 2022; and”.
Disclosures to persons who are joint and severally liable to tax
32 (1) Her Majesty’s Revenue and Customs may disclose information about a person they consider liable to public interest business protection tax as a result of paragraph 1 for the purposes mentioned in sub-paragraph (2).
(2) Those purposes are—
(a) the provision of information to a person Her Majesty’s Revenue and Customs consider liable to public interest business protection tax as a result of paragraph 4 or 5 where that information may be relevant to the tax position of that person (which may include information about assessments, enquiries and appeals);
(b) facilitating the recovery of amounts under paragraph 9(6) (recovery of amounts paid by persons joint and severally liable from principal taxpayer).
(3) Nothing in this paragraph is to be taken as limiting the circumstances in which information may be disclosed under section 18(2) of CRCA 2005 or under any other enactment or rule of law.
(4) Subject to sub-paragraph (5), no duty of confidentiality or other restriction on disclosure (however imposed) prevents the disclosure of information in accordance with this paragraph.
(5) Nothing in this paragraph authorises the making of a disclosure which—
(a) contravenes the data protection legislation (save that the power conferred by this paragraph is to be taken into account in determining whether a disclosure contravenes that legislation), or
(b) is prohibited by any of Parts 1 to 7 or Chapter 1 of Part 9 of the Investigatory Powers Act 2016 (save that the power conferred by this paragraph is to be taken into account when determining whether a disclosure is prohibited by those provisions).
Application of public interest business protection tax to partnerships and trusts
33 (1) Where a person chargeable to public interest business protection tax as a result of paragraph 1 or 5 is a partnership the responsible partners are jointly and severally liable to any amount to which the partnership is assessed.
(2) The reference in sub-paragraph (1) to “the responsible partners” is to all the persons who are members of the partnership at any time during the disqualifying period.
(3) A partnership is treated as the same partnership notwithstanding a change in membership if any person who was a member before the change remains a member after the change.
(4) Where a person chargeable to public interest business protection tax as a result of paragraph 1 is a trustee, or a body of trustees, of the asset to which the tax relates, the tax may be assessed and charged on and in the name of any one or more of the relevant trustees.
(5) The reference in sub-paragraph (4) to “the relevant trustees” is to all persons who are trustees at any time during the disqualifying period, and any subsequent trustees.
Territorial application of tax
34 A person is chargeable to public interest business protection tax (whether under paragraph 1, 4 or 5) whether or not the person is resident in the United Kingdom.
Power to provide for reliefs etc
35 (1) The Treasury may by regulations make such provision as the Treasury consider appropriate—
(a) about reliefs from public interest business protection tax;
(b) about exemptions from public interest business protection tax.
(2) Regulations under this paragraph may—
(a) make provision about the administration of any such relief or exemption (for example provision about the making of claims);
(b) include provision conferring a discretion on the Commissioners for Her Majesty’s Revenue and Customs or on an officer of Revenue and Customs.
Part 4
Supplementary
Anti-avoidance
36 (1) This paragraph applies to arrangements if the main purpose, or one of the main purposes of the arrangements, is to—
(a) reduce or avoid a charge to public interest business protection tax, or
(b) otherwise avoid the effect of any of the provisions of this Schedule.
(2) Any such reduction or avoidance that would (in the absence of this paragraph) arise from such arrangements is to be counteracted by the making of such adjustments as are just and reasonable.
(3) Any adjustments required to be made under this paragraph (whether or not by an officer of Revenue and Customs) may be made by way of—
(a) an assessment,
(b) the modification of an assessment,
(c) amendment or disallowance of a claim,
or otherwise.
(4) In this paragraph “arrangements” include any agreement, understanding, scheme transaction or series of transactions (whether or not legally enforceable).
No deduction for public interest business protection tax
37 In calculating profits, losses or gains for income tax, capitals gains tax or corporation tax purposes, no deduction is allowed in respect of public interest business protection tax.
Information sharing
38 (1) This paragraph applies to information that—
(a) is held by the Secretary of State or the Gas and Electricity Markets Authority, and
(b) is relevant to public interest business protection tax.
(2) Information to which this paragraph applies may be disclosed by whichever of the Secretary of State or Gas and Electricity Markets Authority holds it (or anyone acting on behalf of that person) to the Commissioners for Her Majesty’s Revenue and Customs for the purposes of their functions relating to public interest business protection tax or any other tax.
(3) Subject to sub-paragraph (5), no duty of confidentiality or other restriction on disclosure (however imposed) prevents the disclosure of information in accordance with sub-paragraph (2).
(4) This paragraph does not limit the circumstances in which information may be disclosed under section 105(2) to (4) of the Utilities Act 2000 or under any other enactment or rule of law.
(5) Nothing in this paragraph authorises the making of a disclosure which—
(a) contravenes the data protection legislation (save that the power conferred by this paragraph is to be taken into account in determining whether a disclosure contravenes that legislation), or
(b) is prohibited by any of Parts 1 to 7 or Chapter 1 of Part 9 of the Investigatory Powers Act 2016 (save that the power conferred by this paragraph is to be taken into account when determining whether a disclosure is prohibited by those provisions).
Application of the Provisional Collection of Taxes Act 1968
39 The Provisional Collection of Taxes Act 1968 has effect as if section 1(1) of that Act (temporary statutory effect of House of Commons resolutions affecting listed taxes or customs or excise duties) contained a reference to public interest business protection tax.
Power to apply, disapply or modify provisions of relevant tax legislation
40 (1) For purposes in connection with the administration of public interest business protection tax, the Treasury may by regulations make provision about the application of relevant tax legislation to public interest business protection tax (including provision disapplying or modifying such legislation or applying legislation that would not otherwise apply).
(2) Relevant tax legislation means any provision made by or under—
(a) the Taxes Acts, or
(b) Part 3 of this Schedule.
Regulations
41 (1) A power to make regulations under this Schedule includes power to make—
(a) consequential, supplementary, incidental, transitional or saving provision;
(b) provision having retrospective effect.
(2) Regulations under this Schedule are to be made by statutory instrument.
(3) Sub-paragraph (4) applies to—
(a) regulations under paragraph 2,
(b) regulations under this Schedule that have the effect of limiting the application of, reducing or removing any existing relief or exemption from tax, or
(c) regulations under this Schedule which have retrospective effect, other than regulations having retrospective effect which provide for a new or increased relief or a new exemption.
(4) A statutory instrument containing (whether alone or with other provision) regulations to which this sub-paragraph applies may not be made unless a draft of the instrument has been laid before and approved by a resolution of the House of Commons.
(5) Any other statutory instrument containing regulations under this Schedule is subject to annulment in pursuance of a resolution of the House of Commons.
Interpretation of Schedule
42 (1) In this Schedule—
“adjusted value” is to be construed in accordance with paragraph 3;
“asset” is to be construed in accordance with paragraph 1(10);
“company” means a body corporate;
“the data protection legislation” has the same meaning as in the Data Protection Act 2018 (see section 3 of that Act);
“discovery assessment” is to be construed in accordance with paragraph 18(1);
“disposal” is to be construed in accordance with paragraph 1(10);
“disqualifying period” is to be construed in accordance with paragraph 4(4);
“disqualifying steps” is to be construed in accordance with paragraph 1;
“fair value”, in relation to an asset held by a person (“P”), means the amount which, at the time as at which the value is to be determined, is the amount which P would obtain from an independent person dealing at arm’s length for—
(a) in the case of an asset comprising rights and liabilities, the transfer of P’s rights under the asset and the release of all P’s liabilities under it, or
(b) in any other case, the transfer of the asset;
“principal taxpayer” is to be construed in accordance with (as the case may require) paragraph 4(1), 5(1) or 5(2);
“public interest business” is to be construed in accordance with paragraph 2(1);
“qualifying purpose” is to be construed in accordance with paragraph 1;
“special measures” is to be construed in accordance with paragraph 2(3);
“tax” (except where the context otherwise requires) means public interest business protection tax;
“the Taxes Acts” has the meaning given by section 118(1) of TMA 1970;
“the tribunal” means the First-tier Tribunal or, where determined by or under Tribunal Procedure Rules, the Upper Tribunal.
(2) For the purposes of this Schedule—
(a) whether a person is connected with another person is to be determined in accordance with section 1122 of CTA 2010, and
(b) whether a person controls a company is to be determined in accordance with section 1124(2) of that Act.
(3) Subsections (5) to (7) of section 118 of TMA 1970 (meaning of references to bringing about loss of tax or situation carelessly or deliberately) apply for the purposes of this Schedule as they apply for the purposes of that Act.
(4) The Treasury may by regulations make further provision about the meaning and application of “fair value” in cases specified in the regulations.
Commencement and expiry
43 (1) This Schedule has effect in relation to the taking of disqualifying steps (whenever taken) in disqualifying circumstances where the public interest business in question becomes subject to special measures—
(a) on or after 28 January 2022, and
(b) before 28 January 2023.
(2) The Treasury may, for the date for the time being specified in sub-paragraph (1)(b), by regulations substitute such later date before 29 January 2025 as may be specified in the regulations.
(3) The power in sub-paragraph (2)—
(a) may be exercised on more than one occasion;
(b) may not be exercised on or after the date for the time being specified in sub-paragraph (1)(b).”—(Lucy Frazer.)
This new schedule provides for a new tax imposed by reference to the value of an asset that was held by a person for the benefit of a public interest business that enters special measures but was instead used in a way that materially contributed to it entering special measures, or to a significant increase of the costs of that business.
Brought up, and added to the Bill.
Schedule 1
Abolition of basis periods
Amendments made: 14, in schedule 1, page 91, line 38, leave out “(see Step 1)” and insert “(“the transition component”)”.
This amendment and Amendments 15 to 17 ensure that a tax liability arising from the transitional arrangements for the coming into force of Schedule 1 may be reduced at Step 6 of the calculation in section 23 of the Income Tax Act 2007.
Amendment 15, in schedule 1, page 91, line 39, leave out “that” and insert “the transition”.
See the explanatory statement for Amendment 14.
Amendment 16, in schedule 1, page 91, line 39, leave out from “2” to end of line 42 and insert “,
(c) the amount of the transition component left after Step 2 were left out of the calculation of net income (and subsequent Steps), and
(b) for the purposes of Steps 5 to 7, the amount (if any) given by sub-paragraph (3) were treated as an amount of tax calculated at Step 4.”
See the explanatory statement for Amendment 14.
Amendment 17, in schedule 1, page 92, line 1, leave out sub-paragraph (3) and insert—
“(3) The amount given by this sub-paragraph is the difference between—
(a) the total amount of tax that would be calculated at Step 5 if Steps 1 to 4 were applied in accordance with sub-paragraph (2)(a) to (c) (ignoring sub-paragraph (2)(d)), and
(b) the total amount of tax that would be calculated at Step 5 if Steps 1 to 4 were applied in accordance with sub-paragraph (2)(a) and (b) (ignoring sub-paragraph (2)(c) and (d)).”—(Lucy Frazer.)
See the explanatory statement for Amendment 14.
Schedule 2
Qualifying asset holding companies
Amendments made: 18, in schedule 2, page 95, line 45, leave out “(1)(b)(i)” and insert “(1)(b)(ii)”
This amendment corrects a cross-referencing error.
Amendment 19, in schedule 2, page 100, line 13, after “connected persons” insert
“(within the meaning of section 1122 of CTA 2010 (“connected” persons))”.
This amendment clarifies what is meant by a person being connected to another.
Amendment 20, in schedule 2, page 100, line 18, leave out paragraphs (i) and (ii) and insert—
(i) any person who would be regarded as a participator (for the purposes of that Part) only as a result of being a creditor of the fund in respect of a normal commercial loan (within the meaning it has in paragraph 3) is not to be regarded as a participator,
(ii) any interest a participator has as a creditor of the fund in respect of a normal commercial loan is not to be regarded as an interest of that participator,
(iii) as if paragraph (a) of section 450(3) of that Act were omitted,
(iv) paragraphs 5(5) and 6(5) and (6) of this Schedule apply for the purposes of determining the rights of participators in the fund as they apply for the purposes of determining relevant interests in a QAHC, and”
This amendment provides that the provision of a commercial loan to a fund will not constitute an interest in it for the purposes of determining whether a fund is close and provides for the application of certain rules of this Schedule in making that determination.
Amendment 21, schedule 2, page 100, line 31, leave out sub-paragraph (iii)
This amendment is consequential on Amendment 20.
Amendment 22, page 100, line 34, at end insert—
“(5A) In making a determination under sub-paragraph (5)(b), neither a manager of a fund nor a general partner in a limited partnership that is a collective investment scheme is to be regarded as having control of that fund or scheme unless that manager or partner would be treated as having control of it as result of satisfying a condition in section 450(3)(b) to (d) of CTA 2010 (whether alone or with other persons).”
This amendment ensures that managers and general partners of certain types of funds will only be regarded as having control of a fund as a result of their economic interest in it or as a result of their voting power.
Amendment 23, in schedule 2, page 100, line 38, leave out from “the fund” to end of line 39
This amendment removes an over-elaboration of the concept of voting power (in a fund).
Amendment 24, in schedule 2, page 101, line 3, leave out “6(6)” and insert “6(7)”
This amendment corrects a cross-referencing error.
Amendment 25, in schedule 2, page 101, line 14, after “(5)(a)(i)” insert
“and (ii) (as they apply by virtue of sub-paragraph (5)(b))”.
This amendment is consequential on Amendment 20.
Amendment 26, in schedule 2, page 101, line 17, at end insert—
“manager”, in relation to a fund, means—
(a) any person who is the manager of the property that is the subject of or held by the fund, or
(b) any other person who has, or is expected to have, day-to-day control of that property.”
This amendment defines “manager” for the purposes of Amendment 22 and paragraph 9(3) of Schedule 2.
Amendment 27, in schedule 2, page 101, line 46, after “connected” insert
“(within the meaning of section 1122 of CTA 2010 (“connected” persons))”.
This amendment clarifies what is meant by a person being connected to another.
Amendment 28, in schedule 2, page 101, line 47, after “controlled” insert
“(within the meaning of section 450 of that Act)”.
This amendment clarifies what is meant by a person having control of another.
Amendment 29, in schedule 2, page 115, line 6, leave out paragraph (d)
This amendment removes provision disapplying provision about intangible fixed assets that is otiose, given intangible fixed assets will not be within the ring fence business of a QAHC.
Amendment 30, in schedule 2, page 120, line 27, leave out “regardless” and insert “security”.—(Lucy Frazer.)
This amendment corrects an error.
Schedule 5
Insurance contracts: change in accounting standards
Amendments made: 31, in schedule 5, page 137, line 16, leave out “the words in brackets” and insert—
“(adjusted, where relevant, in accordance with step 2)”.
This amendment clarifies which words are to be omitted from Step 4 in section 76 Finance Act 2012.
Amendment 32, in schedule 5, page 137, line 18, after “etc)” insert—
“(i) in subsection (2), in paragraph (a) omit “(but see subsection (3))”;”
This amendment omits a reference in section 77(2) Finance Act 2012 to section 77(3), which is also being omitted.
Amendment 33, in schedule 5, page 137, line 34, leave out paragraph (h) and insert—
“(h) in section 128 (relief for transferee in respect of transferor’s BLAGAB expenses)—
(i) in the heading, after “transferor’s” insert “excess”;
(ii) omit subsections (2) to (4);”—(Lucy Frazer.)
This amendment ensures that the provisions of section 128 Finance Act 2012 relevant to the transfer of excess basic life assurance and general annuity business expenses in the context of a transfer under Part VII of the Financial Services and Markets Act 2000 are retained.
Third Reading.
Lucy Frazer Portrait Lucy Frazer
- Hansard - - - Excerpts

I beg to move, That the Bill be now read the Third time.

In the autumn Budget, the Chancellor set out a vision to build a stronger economy that would allow this country to bounce back from the pandemic. This Finance Bill takes forward measures that will help to turn that vision into reality and drive growth for our country long into the future. Its measures will support business across the UK, including our banking, creative and shipping sectors. In addition, the Bill will protect businesses and the public by clamping down on tax evasion and economic crime, improving trust and building a fairer UK economy.

I turn first to the measures in the Bill designed to safeguard and strengthen industry and the wider economy. To help businesses invest and grow, we are extending the annual investment allowance at its highest-ever level of £1 million until 31 March 2023. The £1 million AIA level means that more than 99% of businesses will have their plant and machinery expenditure covered.

We are also extending the support offered to the creative industries by providing additional tax reliefs to theatres, orchestras, museums and galleries as the sector recovers. These rates of higher relief will provide a further incentive for new productions, exhibitions and concerts up to April 2024.

Finally, reforms to the UK tonnage tax regime will encourage more firms to base their headquarters in the UK to use our world-leading maritime services industry and to fly the flag of the UK. This will bring jobs and investment throughout the country, and especially to our coastal communities.

I now turn to how the Bill will deliver stronger public finances. The Bill sets the rate of the bank surcharge so that the combined rate on banks’ profits will increase to 28% from April 2023. It also increases the surcharge allowance to £100 million. These changes will ensure that the banks continue to make a fair contribution while encouraging growth and competition for smaller groups within the UK banking market.

The 1.25% increase on dividend income rates from 6 April 2022 will help fund the health and social care settlement, ensuring that contributions are made based on employed and self-employed earnings. The Government are also introducing the new 4% residential developer tax on the most profitable developers. This will raise at least £2 billion over the next decade to help pay for the removal of unsafe cladding, providing reassurance to home owners and boosting confidence in the UK housing market.

At the heart of this Finance Bill is the desire to safeguard taxpayers’ interests and deal with those who avoid paying their fair share. The economic crime levy will help deliver the Government’s objectives to combat economic crime and will raise an expected £100 million per year to fund anti-laundering measures. The levy is calculated by UK revenue and provides the fairest and simplest method for the anti-money laundering regulated sector to contribute further. That will cement the UK’s reputation as a secure country in which to conduct business and solidifies the Government’s ambition to permanently tackle economic crime.

As I mentioned earlier, the Bill’s measures will clamp down on tax avoidance and evasion. It will give HMRC more powers to tackle promoters of tax avoidance schemes by levying penalties on UK entities that enable them. The measures are accompanied by an increase in the duty charge on tobacco products by 2% and a rise in the minimum excise tax to 3% above RPI inflation, alongside new measures to tackle duty evasion. That will help reduce the long-term burden on the NHS and improve public health generally.

By targeting businesses that manipulate electronic records to evade tax, the Bill reinforces the Government’s efforts to tackle unscrupulous businesses that carry out electronic sales suppression. The measures are essential to Britain’s reputation as a global hub for businesses and as a secure and transparent place in which to conduct business.

I thank hon. and right hon. Members for their helpful and insightful contributions to the debates during the Bill’s passage.

To conclude, this Finance Bill supports our efforts to build a stronger economy. It tackles tax evasion and avoidance, and, ultimately, its measures will create a brighter and simpler future for industry, the economy and the UK as a whole. For those reasons, I commend it to the House.

18:43
James Murray Portrait James Murray
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When we first debated this Finance Bill on Second Reading in November last year, it was clear to us that it offered nothing to help people struggling with the rising costs of living and facing tax rises this April. Since that time, pressures on people across this country have only become more intense, and the need for the Government to act has only become more urgent.

Inflation is now at its highest rate in decades and energy bills are set to soar in April, just as the Chancellor is set to hike national insurance on working people. That tax rise, when combined with energy price rises and other tax hikes, will leave families on average £1,200 worse off a year. Yet there is nothing in the Bill to help with the cost of living. There is, however, a tax cut for banks in the Bill, despite bankers being widely expected to receive large bonuses this year, as investment banks’ profits have soared off the back of a wave of takeovers and mergers caused by the pandemic. It shows just how out of touch this Chancellor is. At the weekend, he decided to dig in over his tax rise for working people. By the middle of the week, he is using the Bill to cut taxes for banks by £1 billion a year.

In earlier debates on the Bill, we were critical of the Government for not doing enough to combat economic crime. We welcome the principle of a levy, but we are left wondering why on earth legislation that would set up a register of overseas owners of UK property—a critical tool to tackle money laundering—has been left to gather dust. On Second Reading, we challenged the Government over their failure to establish such a register. Our country has earned the shocking reputation as the world’s laundromat for illicit finance. A new public register would bring desperately needed transparency to the overseas ownership of UK properly, and would help to stop it being used for money laundering.

Since that time, the need to bring transparency to the question of who owns high-end property in the UK has only become more urgent. Economic sanctions against Russia will never have the effect that they should as long as our Government let those who are linked to Putin and his regime hide their wealth in the mansions of Knightsbridge and Belgravia.

We also asked what the Bill does for another type of property: buildings with unsafe cladding that need to be remediated. We questioned Ministers on how they had arrived at their decision on the level of the residential property developer tax when so much more was needed to protect leaseholders from bearing the cost. Since we first raised our concerns about the detail of that tax, the Government have realised that they were wrong to make leaseholders in buildings of between 11 metres and 18 metres take out forced loans to cover the cost of cladding remediation in their buildings. The Housing Secretary now says that he is planning to convince developers to hand over £4 billion voluntarily. If he fails, we want to know how leaseholders and those in need of affordable homes will be protected. Despite our questioning earlier today, Treasury Ministers have been unable to offer people the reassurance they need.

Finally, there is no plan for growth in the Bill. We are stuck in a low-growth, high-tax cycle. With strong growth, we would have the chance to create new jobs, with better wages and conditions, in every part of this country. With low growth, it gets ever harder to meet the challenges we face, and the Tories have no choice other than to put up taxes.

The shadow Chancellor, my hon. Friend the Member for Leeds West (Rachel Reeves), has set out Labour’s plan for growth: investing in skills, research and development, and the industries of the new green economy; choosing to buy, make and sell more in Britain; and creating jobs in every part of the country. We would build a stronger economy with our plan to give working people the respect they are due, to give people real economic security, and to ensure prosperity in every part of Britain. That is the approach that our country needs in order to grow and meet the challenges of the future.

Right now, people across the country need the Government to protect them from the cost of living crisis and protect our country from dirty money from Russia. All we have instead is a Prime Minister who does everything he can to protect himself. We opposed the Bill on Second Reading and, as our reasons for doing so have only grown stronger, we will vote against it tonight.

18:47
Alison Thewliss Portrait Alison Thewliss
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I thank the Government and the official Opposition Front-Bench teams for the way in which proceedings on the Bill have been conducted. We have all learned an awful lot about each other, and it has been a genuinely interesting process. I thank the Clerks, Chris Stanton and Kevin Maddison, for their support, without which we would definitely have struggled to put our amendments forward. I thank Clorinda Luck, one of the SNP’s senior researchers, for stepping in at short notice to cover some of the research on the Bill—I am very grateful to her for that work.

Although some of the measures in the Bill are welcome, we in the SNP have to oppose it because it is such a missed opportunity to do so much more about economic crime and the scourge of money laundering and kleptocracy coming to the shores of these islands. There is a lack of action to tackle the misuse of Scottish limited partnerships and shell companies, and to tackle the money flowing through the very city we are standing in. The Bill is also a missed opportunity to do more on net zero in particular. Given last year’s COP, there should have been a great deal more to focus minds and move to a greener and fairer economy.

The Bill is indicative of a Government who are removed from the problems that ordinary people face and who are without solutions to the challenges that our constituents are seeing right now: the challenges of inequality, the scars of 10 years of austerity, the cost of living crisis, which is making life so very difficult for so many people right now, soaring inflation and energy prices that are spiralling out of control.

Contrast that with the opportunity presented by Kate Forbes in the Scottish Parliament last week. With the limited powers that we have over the Scottish Budget, that Budget offers great hope to the people of Scotland. We look enviously at the powers that we could have as a full, independent, normal nation with the full levers to make the real inroads into inequality, to make life fairer, better and more just for the people of Scotland. So we cannot support this Budget and we wish that very soon we will have that full range of powers to make things better for our own citizens.

Question put, That the Bill be read the Third time.

18:50

Division 183

Ayes: 302


Conservative: 296
Democratic Unionist Party: 2
Independent: 1

Noes: 226


Labour: 164
Scottish National Party: 40
Liberal Democrat: 12
Independent: 4
Plaid Cymru: 2
Alliance: 1
Green Party: 1
Alba Party: 1

Bill read the Third time and passed.