Finance (No. 2) Bill

Alison Thewliss Excerpts

2nd reading
Tuesday 16th November 2021 Commons Chamber

[Alison Thewliss (Glasgow Central) (SNP)]

It is a pleasure to speak on Second Reading of the second Finance Bill of the year. I welcome the Financial Secretary to the Treasury to her place, although I feel obliged to express my sadness that I will not spend the next few weeks in the company of the right hon. Member for Hereford and South Herefordshire (Jesse Norman), who has just left the Chamber. I am sure that he will not miss my constant references to Scottish limited partnerships, but I put the new Minister on notice that I expect her to be the one to fix that issue once and for all.

We on the Scottish National party Benches will of course propose worthy amendments—that will get voted down and ignored—in trying to make the very best of this flawed Finance Bill process, as the UK’s horribly complex tax system obtains yet another layer. I call again for the Finance Bill Committee to be allowed to take evidence. It remains baffling to me that although all the other legislative Committees in this place take expert evidence, the one that will directly affect the lives of everyone and every business in the country does not. That must change.

If the Finance Bill Committee took evidence, perhaps the UK Government would make fewer mistakes. Parts of the Bill correct oversights and errors, such as clause 83 and schedule 11 concerning the plastic packaging tax, about which I raised concerns in the passage of the previous Finance Bill. That measure is due to come into force in April next year, but the explanatory notes state that the changes in this Bill are

“to ensure that the tax…meets”

previously “announced policy objectives” and “works as intended”—well, I hae ma doots. I note that there are also measures to deal finally with the issue of second-hand cars in Northern Ireland—another bit of Brexit red tape that was not written on the side of the bus.

There is no doubt that we are facing a cost-of-living crisis and this Finance Bill provided the biggest possible opportunity for the Government to improve the lives of people across the UK. Instead, however, we see in schedule 6 that the Chancellor has seized the opportunity not to redistribute wealth, but to cut taxes for his banker pals, paid for by slashing universal credit, increasing national insurance and scrapping the pensions triple lock.

Ministers are keen to try to claim that the minimum wage is, in some way, a living wage, but it is not. This week is Living Wage Week and the real living wage rate has risen from £9.50 to £9.90 and to £11.05 in the city of London from today, so the UK Government proposals do not even keep pace with the real living wage, based on the cost of living.

I am proud that I have lots of real living wage employers in my constituency, because they see the benefit to their employees of paying a fair wage—they retain staff better and those staff are happier in their work—and they are right across a full range of sectors. There are 2,400 living wage employers in Scotland, including, in my constituency, Bike for Good, Pure Spa, Thenue housing association and a club that has obtained legendary status in the past couple of weeks: Firewater, on Sauchiehall Street. All of them pay their staff a fair wage and do their bit. I encourage the Government to become a living wage employer with the real living wage, because it would help so many people if they took a lead on that, as the Scottish Government and local authorities in Scotland have done.

[David Linden (Glasgow East) (SNP)]

I pay tribute to my hon. Friend’s work on campaigning for a fair wage for all, regardless of age. Will she join me on calling on the Government to extend that pay equality to apprentices? We have seen that with such things as the business pledge in Scotland, but unfortunately, this Government continue to think that apprentices can be paid less than £4 an hour, which is absolutely shocking.

[Alison Thewliss]

My hon. Friend is absolutely right to point that out. I do not know how the Government think that apprentices are supposed to live and pay their bills on the meagre wages set as their minimum wage. In fact, through the years of this Tory Government and since Labour brought in the minimum wage, the rate between the lowest-paid—those youngest workers entitled to the minimum wage—and those at the highest end of that age distribution has increased. That gap is growing wider and wider every single year, and it is a scandal, frankly, that people are being discriminated against solely on the basis of age. The Government should put that right.

It is a grim time for many people in this country and things are not optimistic for many businesses either. As the Minister mentioned, the March Budget gave notice on increasing corporation tax and extended the annual investment allowance until the end of March 2023. These measures, however, come in the context of a national insurance hike—a tax on jobs—that the Federation of Small Businesses estimates might have a 7% marginal rate for some. This should have been scrapped and the employment allowance increased, if the Chancellor was serious about helping business owners and employees.

Hospitality and tourism firms, having been hit the hardest during the pandemic, will not retain their 12.5% VAT rate beyond March. Many did not benefit at all from the reduced rate during the pandemic, because they were not able to trade, and to hike VAT back up to 20% just as the tourist season begins next year seems absolutely daft. The UK Government seem to be playing catch-up with Scotland. The Chancellor’s plan to cut hospitality and business rates next year is less than what they are offering now and far below the 100% relief that the Scottish Government are already offering to those businesses this financial year. That is in addition to the hugely successful small business bonus scheme, which takes many businesses out of business rates altogether.

The tax reliefs in clauses 16 to 22 for businesses in the culture and arts sector that have struggled so much in the past year are welcome, but keeping the VAT reduction could provide an incentive to get people back through the doors of our galleries, theatres, music venues and funfairs.

My SNP colleagues and I have long argued in this House that more should be done to tackle economic crime and I was interested to see some measures in the Finance Bill that deal with this area of policy. Part 3 provides a framework for the Government to issue a new tax to tackle economic crime. This UK Tory Government have failed time and again to tackle tax avoidance and economic crimes—that is not a matter entirely of inadequate legislation or resources, but of woefully poor enforcement.

Under the plans set out in the Bill, all undertakings that fall under money-laundering regulations and have a revenue of over £10.2 million will be subject to the new economic crime levy. Although I support the broad principles, I have some concerns about how this will work in practice, because placing more of a burden on businesses might not exactly have the desired effect. The Law Society of England and Wales has stated its opposition to the levy, stating that it is “an additional tax” on anti-money laundering regulators and against the “polluter pays” principle. The Association of British Insurers has concerns that insurance firms, a very low risk area for money laundering, may be disproportionately hit by the measure, which could result in reducing access to insurance for vulnerable consumers. This is another area where more evidence needs to be taken to be sure that the intended effect of the Government’s measures is actually what transpires.

The Treasury Committee, which I am proud to sit on, has taken a lot of evidence in our inquiry on financial crime and it would be wise of the Government to take heed of that before progressing further with this measure. It would also be useful to know the Government’s full timetable and resourcing plan for Companies House reform. By tightening up company registration, giving Companies House AML responsibilities—as they should have—increasing the comically low fee for company registration and actually enforcing their own laws, the Government could bring in much more money and lose less of it through the complex schemes that Companies House currently facilitates.

When I asked the small business Minister—the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Sutton and Cheam (Paul Scully)—in a written parliamentary question recently how much money has been raised by fines on Scottish limited partnerships that have not registered a person of significant control in the past three years, I received a response that stated that one fine had been levied in 2020-21. One fine—is that it? The last time I asked, in March last year, 948 SLPs had not filed PSC information by 31 January 2020. That figure was 2,019 in January 2019 and 7,078 in January 2018. Ministers may claim that this looks like an improving picture, but what is more likely to be happening is that people are moving those business around to similar structures in Ireland or into other vehicles such as trusts. To be clear, Companies House rules state:

“Anyone who does not respond to…notices within one calendar month, or gives false information, commits a criminal offence. They could receive a 2 year prison sentence, a fine or both.”

As far as I can establish, none of the firms that fell foul of the law was fined, apart from one, and no one got the jail. I ask again: how much money are the UK Government forgoing by not enforcing their own rules? What is the damage to our reputation, and to Scotland’s reputation, from being associated with money laundering and criminality that this UK Tory Government are failing to prevent?

The SNP is calling for a root-and-branch review of the tax system, which is much too complex and has too many places to hide and move things around. The UK Government have not confirmed whether any of the money raised by their proposed tax will be used to tackle tax avoidance. I would welcome some clarity on that point today.

Part 5 contains provisions to tackle tax avoidance, which is an issue that I have raised again and again, so I am pleased to see that some limited steps are being taken. The Bill will give HMRC powers to publish information on individuals who promote tax avoidance schemes. We support that approach in principle, but I note the concerns that the Chartered Institute of Taxation has raised about the drafting. HMRC says that it is targeting “the most egregious promoters” who flout the rules, but CIOT is concerned that the definitions of “promoter”, “relevant proposal”, “relevant arrangements” and “connected person” set a low bar.

The Bill’s wording also extends considerable latitude to HMRC officers: an authorised officer need only “suspect” that a scheme falls within the definition for people to be publicly named and shamed. I have constituents who have been named and shamed under minimum wage regulations and who have found it very difficult to challenge that and recover their reputation.

CIOT is also concerned that in future HMRC could use the measure more widely than is being proposed. I appreciate that the Bill makes provision for HMRC to retract and amend published information that has been shown to be incorrect, but it would be much better if we could have some assurances that it will get it right the first time, and some assurances about how the scheme will be resourced.

Lastly, I want to speak about an issue that has been literally close to home in the past few weeks. The eyes of the world have been on my constituency in Glasgow Central as it hosted the COP26 summit on climate change. The summit was an opportunity for the Government to show global leadership and grasp the opportunities that a green economy can provide, but the reality is that the only thing green about the Bill is the paper it is printed on. The Government’s ambivalence towards a just transition is writ right through it.

We need a comprehensive plan that understands the impact of our taxation choices on our emissions—a green OBR, perhaps, to hold this Government to account. The Government have given the Financial Conduct Authority and the Bank of England responsibilities in that area, but are taking none themselves in the Bill. Nowhere is that clearer than in the cut to domestic air passenger duty, which the Red Book says will lose the Government £30 million to £35 million a year in revenue. People do not have many options when they fly long-haul—despite what the Proclaimers say, few people would walk 500 miles and walk 500 more—but within these islands they do have the choice between getting on a plane and getting on a train. It is already much, much cheaper to fly in many circumstances. Cutting APD while allowing train fares to rise again and again is absolutely no way to incentivise people to take more climate-friendly options.

The Bill makes provision for global shipping companies to receive tax breaks for flying the red ensign. Tonnage tax is a complicated scheme that allows companies to disregard profits for tax purposes, creating a very low-tax environment. Would it not have been better to link tax breaks to emissions rather than to waving the British flag, to incentivise the green technologies required to transform shipping, and to take a lead on the issue?

Scotland is delivering action to secure a net zero and climate-resilient future in a way that is fair and just for everyone. We are committed to a just transition to net zero by 2045, with an ambitious interim target of a 75% reduction by 2030. The Bill’s purpose allegedly covers delivery on the commitments made in the 2020 White Paper on energy and the Prime Minister’s 10-point plan, contributing to the Government meeting their legally binding obligations to achieve net zero carbon emissions by 2050, but in reality there is very little in it to help Scotland to achieve our climate change goals. Indeed, in many ways it holds us back.

There is no reversal of the decision to scrap investment in a carbon capture and storage facility in the north-east of Scotland; it looks as if that investment will instead go to Tory marginals in the red wall. That is the worst type of pork barrel politics. The Acorn project at St Fergus would have been a world-leading example of a just transition project, but once again the people of Scotland have been let down by the Tories at Westminster. Neither is there any commitment to help to develop emerging wave technologies, which might well move abroad without the correct support, and there are no measures in the Bill to reform the transmission charging scheme, which costs wind farms in Scotland to plug into the grid while it pays companies in the south-east of England to connect. When I asked the Chancellor about that recently, I got blank looks and blah blah blah in return.

The Bill makes clear once again the UK Government’s lack of interest in Scotland’s commitment to tackling climate change. Schedule 14 makes provision to change VAT rates for freeports; it is disappointing to see no commitment to the fair work conditions and net zero ambitions put forward by the Scottish Government for a green port scheme. Scottish Ministers have engaged in good faith to try to improve a UK Government policy while further progressing our climate change goals: the Scottish Government wanted to take the freeport policy and augment it to work in the best interests of workers and the environment. Who could argue with that, other than Government Members? The Scottish Government have been ignored and sidelined by this UK Government. It is just not good enough.

This UK Tory Government cannot be trusted to act in the interests of Scotland. I look forward to the day when there is a Government who can and will act in those interests, using the levers of taxation powers to benefit our people, make our businesses grow and protect our environment for the future. Only independence can give Scotland that Government.

Finance (No. 2) Bill

Alison Thewliss Excerpts

Committee stage
Wednesday 1st December 2021 Commons Chamber

[James Murray]

I rise to speak in support of the new clauses in my name and those of the Leader of the Opposition and the shadow Chancellor.

Key principles of our tax system are that everyone should pay their fair share and that, in turn, the Government should treat everyone fairly. On the first of those two principles, the fact that large multinationals avoid paying their fair share of tax in the UK is one that rightly angers people across the country. This behaviour means that the UK misses out on vital revenue that could support our public services and it leaves British businesses that play fair at a disadvantage.

As the Minister will know, we were very disappointed that the Government recently allowed the global minimum corporate tax rate, which seeks to limit profit shifting and tax avoidance, to fall from the initial 21% proposed by President Biden to just 15%, but this is still progress. Before I turn directly to clauses 27 and 28, which relate to profit shifting, I ask the Minister to briefly confirm when she next speaks exactly what the timetable is for the Government putting the global minimum rate into UK law.

Clauses 27 and 28 amend the operation of the diverted profits tax, which was introduced in 2015 to try to limit multinationals from entering into profit-shifting arrangements through which they could avoid paying tax. As we have heard, clause 27 amends UK law on double tax treaties to allow mutual agreements between the UK and the other relevant tax state to take effect in relation to the diverted profits tax. Clause 28 is also technical, although it raises an important question about this Government’s willingness to hold companies to account for tax fraud. I would like to press the Minister on that point. TaxWatch has highlighted that HMRC’s annual accounts, published in November, show that HMRC is currently carrying out 100 investigations into multinational companies that may be diverting profits away from the UK, and HMRC’s statements clearly imply that a number of these investigations relate to fraudulent conduct.

In 2019, HMRC introduced a new profit diversion compliance facility, which allows multinationals to come forward and pay the taxes that they should have paid, plus any penalties, without having to pay the diverted profits tax. The changes in clause 28 appear to facilitate the settlement of disputes without diverted profits tax being charged, by extending the time period for which a company can amend previous tax returns in order to get out of having to pay it. Will the Minister confirm whether any company that is currently under investigation for fraudulent conduct involving diverting profits away from the UK may have the investigation of their fraudulent conduct dropped if they make use of the profit diversion compliance facility? It is an important question about how robust the Government’s approach to tax avoidance really is. As TaxWatch has put it,

“the Profit Diversion Compliance Facility should not become an amnesty for tax fraud.”

More widely, it is critical that the Government take more action on economic crime. We therefore support the principle behind the levy introduced by clauses 53 to 66, and hope that the funding from the levy will go some way towards increasing much needed capacity for the Government to tackle economic crime. We question, however, whether it will be enough, so our new clause 5 would require the effectiveness of the levy to be reviewed. This concern is evidently shared across the House, as new clause 15 in the name of my right hon. Friend the Member for Barking (Dame Margaret Hodge) and some Government Members would require the Government to assess the effectiveness of the proposed levy rates, and of levy rates twice and three times as high.

We also question why the Government are failing to make critical changes to the law that everyone agrees would strengthen the UK’s ability to fight economic crime. At the top of the list must be finally putting in place a public register of the beneficial owners of overseas entities that own UK property, to which our new clause 5 refers. A new public register would bring much needed and much delayed transparency to the overseas ownership of UK property, and help to stop the use of UK property for money laundering.

Plans to introduce a register were first announced by the Conservatives in 2016. Legislation was first published in 2018. We were promised that it would be operational by 2021, yet with just one month of this year left to go, this has become another broken promise from the Conservatives. It is very hard to conclude anything other than that the Government are, under the leadership of the current Prime Minister, deliberately abandoning their commitment to the register. We need only look at the language in the annual written statements on progress toward its introduction to see a clear pattern emerge.

In May 2019—two months before the right hon. Member for Uxbridge and South Ruislip (Boris Johnson) became Prime Minister—a ministerial update on the register reported:

“Over the past year, significant progress has been made towards the introduction of the register... the Government intends that the register will be operational in 2021”.

Yet a year after the current Prime Minister took office, the next ministerial update, in July 2020, took a different tone, saying rather more cautiously:

“This register will be novel, and careful consideration is needed before any measures are adopted”.

By November 2021, the latest ministerial update simply said:

“The overseas entities register is one of a number of proposed corporate transparency reforms... The Government intend to introduce legislation to Parliament as soon as parliamentary time allows.”

Those statements do not sound like a toughening of resolve.

What is more, the ministerial statements themselves have only been published because the Government have been required, by section 50 of the Sanctions and Anti-Money Laundering Act 2018, to publish three reports on progress toward the register—one in each of the years 2019, 2020 and 2021. That is why our new clause 5 would require the Government to continue publishing annual updates on 31 December each year on progress towards implementing the register. We are determined not to allow the Prime Minister to let this commitment slip out of sight.

As I said on Second Reading, it is astonishing that the Government feel that the need for this register is becoming less urgent. The Pandora papers confirmed how overseas shell companies secretly buy up luxury property in the UK and how much transparency is needed to help to tackle money laundering. Ministers did not respond to my questions on Second Reading, but I did receive a letter from the Exchequer Secretary yesterday, where she wrote:

“While these measures have full Treasury support, they are not Treasury led.”

It is quite astonishing that Treasury Ministers are now trying to blame their colleagues in the Department for Business, Energy and Industrial Strategy for the delay in bringing in the register, when every indication is that the lack of determination comes directly from the Prime Minister. The truth is that concerns over Russian donations to the Conservative party and the use of high-end property in the UK for Russian money laundering mean that putting in place the register of overseas owners without delay is a key part of restoring the trust in politics that Conservative MPs and the Prime Minister have done so much to erode.

Clauses 84 to 92 and schedules 12 and 13 relate to tax avoidance. Our new clause 7 requires an independent assessment of HMRC’s approach to the loan charge scheme and recommendations for altering that approach. In my opening remarks on the previous group of amendments, I said that a key principle of our tax system was that the Government should treat everyone fairly. We fear that with their approach to the loan charge the Government are sorely failing in that duty. The Government’s approach to the loan charge means that ordinary people who are victims of mis-selling are facing huge bills that are causing untold distress and personal harm. It was truly shocking to read reports only last week of eight cases of suicide among those facing demands for payments. A new approach to the loan charge is urgently needed.

That is why our new clause would require the Chancellor to commission an independent review to consider HMRC’s approach to the loan charge scheme and make recommendations on how it should be altered. This new review must finally offer a truly independent assessment, which is why we would require the Government to make a statement to the House of Commons on what efforts have been taken to guarantee its independence. Once recommendations have been made, we would then require the Government to explain which of them they will accept, and why, and to report on progress towards implementing them every six months.

It is clear that something is very wrong with the Government’s approach on the loan charge scheme and that efforts until now to find a solution have fallen far short. Our proposal would finally offer a way forward. I urge Members on both sides of the Committee to support our new clause on this matter when it comes to a vote. I also urge them to support our new clause to make sure that the register of the beneficial owners of overseas entities that own UK property does not get forgotten. We have already seen that the promise to have this register operational by this year has been broken. We must now ensure that the Government do not allow it to disappear altogether.

[Alison Thewliss (Glasgow Central) (SNP)]

On 10 November, the Prime Minister said that the UK is

“not remotely a corrupt country”.

One can believe or disbelieve things that the Prime Minister says, but it is clear from the Bill that the UK is certainly not a transparent country when it comes to taxes. Efforts in the Bill to tackle economic crime are of course welcome, but, as ever, this Government are not going far enough to do so. The Minister mentioned the economic crime plan. On Monday, we had the Minister for Security and Borders at the Treasury Committee, where he set out that 34 of the 52 actions have been completed, while the rest are in progress and a few of them appear to be some way from being completed. It worries me that priority is not being given to these actions.

Clauses 53 to 66 provide for the Economic Crime (Anti-Money Laundering) Levy, which the Government estimate will raise approximately £100 million per year to help to fund anti-money laundering and economic crime reforms. SNP Members are concerned that this part of the Bill is not well targeted and could potentially act as an additional tax on businesses that are not breaking the rules. For example, the Association of British Insurers is concerned that insurers will be disproportionately hit, because they present very little risk to the Treasury of tax avoidance and money laundering. The Chartered Institute of Taxation has expressed concern that smaller tax adviser firms may be driven from the market because of the increasing costs and reducing choices for consumers. It has also said that the measure could increase the tax gap by incentivising de-professionalisation. If it becomes too costly for firms to meet compliance, they may just choose to de-register from professional bodies altogether. De-professionalisation can result in less ethical behaviour and increased costs of supervision by HMRC, neither of which is particularly in keeping with the aims of this legislation. I understand that more than 32,000 firms are already supervised directly by HMRC, and the staffing to cover that does not nearly match the size of the job.

Finance (No. 2) Bill (First sitting)

Alison Thewliss Excerpts

Committee stage
Tuesday 14th December 2021 Public Bill Committees

[James Murray]

As we have heard, clause 10 relates to the increase of the normal pension age to 57 from 6 April 2028. The stated intention of the clause is to protect members of the registered pension schemes who, before 4 November 2021, had a right to take their entitlement to benefit under those schemes at or before the existing normal minimum pension age. It exempts members of certain uniformed service pension schemes from the increase, and it introduces new block and individual transfer rules specific to the new protection framework in order to reduce the restrictions on retaining a protected pension age following a transfer. The UK has a long tradition of protecting and rewarding those who have served their country. It is therefore right that we support clause 10, as it provides that protection by safeguarding recipients’ right to retain entitlement to benefits when transferring schemes.

We note, however, that the Low Incomes Tax Reform Group has concerns about the transitional arrangements relating to the clause. Paragraph 28 of the Government’s explanatory note regarding this clause states:

“There may be some transitional issues. For example, an individual who does not have a protected pension age and at 5 April 2028 will have reached age 55 and has started but not completed the process of taking pension savings before the change in normal minimum pension age. The government will provide further advice on the proposed transitional arrangements and provisions in due course.”

That raises concerns about when further advice on the proposed transitional arrangements will be made available, as well as questions about the extent to which that advice will be effectively communicated to the people concerned.

It is vital that people have full detail of any transitional provisions well before the increase to age 57 comes into effect; otherwise, there is a risk that people reaching age 55 in the run-up to 6 April 2028 will make decisions without knowing all they need to know. For example, an individual could cash in a pension in full and put the money in the bank so as to crystallise access to those funds, which may well leave them worse off in the long term, having likely incurred a large tax liability on the encashment and potentially affected their means-tested benefit entitlement. They might also have triggered the money purchase annual allowance, therefore restricting—perhaps unwittingly—their ability to make further contributions. In light of this, will the Minister clarify precisely when “due course” is, in relation to the Government’s further advice regarding the proposed transitional arrangement for the provisions? Will she also confirm what measures the Government will take to make sure that people are aware of the advice when it is finalised?

[Alison Thewliss (Glasgow Central) (SNP)]

This issue speaks to what I and my colleagues have often asked for in Finance Bills—that is, to be able to take evidence. We have received some very good written evidence from different organisations—I thank Scottish Widows, the Low Incomes Tax Reform Group and the Chartered Institute of Taxation for sending evidence to the Committee—but some of the detail requires a bit more interrogation. It would be useful if Finance Bill Committees were able to take evidence on the detail.

I agree with much of what the hon. Member for Ealing North said. Saying that something will happen in due course is not a great reassurance to many people. We have seen the terrible mess that the Government left for the WASPI women—the Women Against State Pension Inequality—who did not receive enough notice of state pension age changes. As a result, many have lost out on what they expected to happen when they reached retirement.

In its evidence, Scottish Widows makes the point well:

“Simplicity is a key driver of engagement with pensions… The average person has 11 jobs in their lifetime—with auto enrolment that could mean them having at least 11 pension pots. Some of these will now be accessible at age 55, others at 57.”

It also notes that

“some customers may have different pension ages within the same pension pot.”

That is not the simplicity that people really need when it comes to planning for their retirement.

There is a range of views. Scottish Widows appears to welcome the changes. The Chartered Institute of Taxation is not convinced that a change to the normal minimum pension age is necessary or desirable. What ought to be at the centre of this discussion is the people who will claim that pension. They need the clearest possible advice and the longest possible amount of notice in order to plan. I ask for clarity from the Government. It is just not acceptable to come before the Committee today without a date and say, “in due course”. People need to be able to plan for one of the most important events in their lives.

--- Later in debate ---

[James Murray]

As we have heard, the clause concerns qualifying asset holding companies, and sits alongside schedule 2. The aim of the clause, we understand, is to recognise certain circumstances where intermediate holding companies are used only to facilitate the flow of capital, income and gains between investors and underlying investments to tax investors, broadly as if they had invested in the underlying assets, and to enable the intermediate holding companies to pay tax that is proportionate to the activities they perform.

At Budget 2020, the Government announced that they would carry out a review of the UK funds regime, covering tax and relevant areas of regulation. The review started with a consultation on the tax treatment of asset holding companies in alternative fund structures, also published at Budget 2020. The Government responded to that consultation in December 2020, launching a second-stage consultation on the detailed design features of a new regime for asset holding companies. The Government’s response to that consultation was published on 20 July 2021.

The clause and schedule 2 introduce the new regime. We understand that the purpose of the measures is to deliver a proportionate and internationally competitive tax regime for qualifying asset holding companies that will remove barriers to the establishment of such companies in the UK. The Government have said that the new regime will include the following key features: eligibility criteria to limit access to the intended users; tax rules to limit the qualifying asset holding company’s tax liability to an amount that is commensurate with its role; and rules for UK investors to ensure that they are taxed so far as possible as if they had invested in the underlying assets directly.

We understand that the eligibility criteria will ensure that the asset holding companies may only be used as part of investment structures where funds are managed for the benefit of a broad pool of investors or beneficiaries. An asset holding company cannot carry out other activities, including trading, to any substantial extent. The tax benefits arising from asset holding company status apply only in relation to qualifying investment activity. The tax treatment of any limited trading activity or any non-qualifying investment activity that is carried on by an asset holding company will not be affected by the company’s status as an asset holding company.

We note that the Government have tabled six amendments to schedule 2, which accompanies the clause. Amendments 1 and 2 seek to pin down the definition of investment management profit-sharing arrangements. According to the explanatory statement, that is to ensure that the legislation is capable of encompassing arrangements in which an entitlement to profits arising in connection with the provision of investment management services by an investment manager arises to another person, such as a company or a trust.

Amendments 3 and 6 provide that a fund that is 70% controlled by category A investors meets the diversity of ownership condition. Amendment 4 seeks to allow existing funds marketed before the commencement of the qualifying asset holding company regime to be treated as meeting regulation 75(2) of the Offshore Funds (Tax) Regulations 2009 if certain information has been produced by the fund and has been made available to Her Majesty’s Revenue and Customs. Amendment 5 modifies the way in which the interests of creditors are accounted for in determining whether a fund is closed. We will not be opposing clause 14 or the Government’s amendments to it.

[Alison Thewliss]

I am a wee bit concerned that the Government have brought these amendments so late in the day. I appreciate that they have brought them now, rather than seeking to come back and amend legislation further down the road. That is something, I suppose. Does the Minister intend to review this legislation, and on what timescale? I am a wee bit worried about the letter we received yesterday, which said that, as originally drafted, the legislation includes some inconsistencies with wider tax rules and within the regime’s eligibility criteria. Given those worries and these amendments, I would like some reassurance from the Minister that the Government are going to keep an eye on this legislation to make sure that it is not exploited or used in the way that it is not intended to be. We need to make sure that people are paying the tax that they ought to be and that the legislation is not used as some kind of dodge.

[Lucy Frazer]

I welcome the lack of opposition to these clauses, which will support UK growth, by the hon. Member for Ealing North. The hon. Member for Glasgow Central made a point about the fact that the Government have made amendments late in the day. I reassure her that they are technical changes. Following engagement with the industry since the introduction of the Finance Bill, the amendments required were pointed out to us and, therefore, it is important that we include the amendments in the Bill. We keep all legislation under review. We are very concerned, as the hon. Member will have seen from other measures in the Bill, about tackling tax avoidance, so we will keep an eye out for any misuse of the measures. I commend the amendments and clause 14 to the Committee.

Question put and agreed to.

Clause 14 accordingly ordered to stand part of the Bill.

Amendments made: 1, in schedule 2, page 97, line 24, leave out “performing investment management services”.

This amendment is one of a pair of amendments designed to secure that the definition of investment management profit-sharing arrangements is capable of encompassing arrangements where an entitlement to profits arising in connection with the provision of investment management services by an investment manager arises to another person (such as a company or a trust).

Amendment 2, in schedule 2, page 97, line 25, leave out from “profits of” to end of line 26 and insert

“investments in connection with the provision of investment management services in relation to those investments.”

This amendment is one of a pair of amendments designed to secure that the definition of investment management profit-sharing arrangements is capable of encompassing arrangements where an entitlement to profits arising in connection with the provision of investment management services by an investment manager arises to another person (such as a company or a trust).

Amendment 3, in schedule 2, page 99, line 36, leave out paragraph (c) and insert—

“(c) the fund is 70% controlled by category A investors.”

This amendment is one of a pair of amendments that provide that a fund that is 70% controlled by category A investors meets the diversity of ownership condition.

Amendment 4, in schedule 2, page 99, line 42, leave out “6 April 2020” and insert “1 April 2022”.

This amendment will allow existing funds marketed before the commencement of the QAHC regime to be treated as meeting regulation 75(2) of the Offshore Funds (Tax) Regulations 2009 if certain information has been produced by the fund and has been made available to HMRC.

Amendment 5, in schedule 2, page 100, line 19, at end insert ‘—

(i) as if in subsection (4) of section 450 of that Act, the reference to a loan creditor were to a creditor of the fund in respect of a normal commercial loan (within the meaning it has in paragraph 3),

(ii) as if in that subsection, at the end there were inserted “and for the purposes of subsection (3)(d)”, and

(iii)’

This amendment modifies the way in which the interests of creditors are accounted for in determining whether a fund is “close”.

Amendment 6, in schedule 2, page 100, line 30, leave out sub-paragraph (6) and insert—

“(6) A fund is 70% controlled by category A investors if a category A investor, or more than one category A investor between them, directly or indirectly possesses—

(a) 70% or more of the voting power in the fund or, in the case of a fund that is not a body corporate, an equivalent ability to control the fund,

(b) so much of the fund as would, on the assumption that the whole of the income of the fund were distributed among persons with interests in the fund, entitle that investor or those investors to receive 70% or more of the amount so distributed, and

(c) such rights as would entitle that investor or those investors, in the event of the winding up of the fund or in any other circumstances, to receive 70% or more of the assets of the fund which would then be available for distribution among persons with interests in it.

(6A) For the purposes of sub-paragraph (6)—

(a) a category A investor indirectly possesses something if the investor possesses it through a body corporate or a series of bodies corporate;

(b) the interests of the participants in a category A investor that is a collective investment scheme that is transparent (within the meaning given by paragraph 6(7)) are to be treated as interests of the investor (instead of its participants) if that investor meets the diversity of ownership condition as a result of sub-paragraph (2)(a);

(c) in determining, for the purposes of sub-paragraph (6)(b) or (c), proportions of income or assets persons with an interest in the fund would be entitled to, ignore any interest any person has as a creditor of the fund in respect of a normal commercial loan (within the meaning it has in paragraph 3);

(d) paragraphs 5(5) and 6(5) and (6) apply for the purposes of determining the interests of persons in a fund as they apply for the purposes of determining relevant interests in a QAHC.

(6B) For the purposes of sub-paragraphs (5)(a)(i) and (6A)(c), references to a creditor of a fund are to be treated, in the case of a fund that is a partnership, as not including any creditor who is a partner of that fund.” —(Lucy Frazer.)

This amendment is one of a pair of amendments that provide that a fund that is 70% controlled by category A investors meets the diversity of ownership condition.

Schedule 2, as amended, agreed to.

Clause 15

Real Estate Investment Trusts

Question proposed, That the clause stand part of the Bill.

--- Later in debate ---

[James Murray]

As we have heard, clause 15 and schedule 3 concern real estate investment trusts. The clause and schedule amend the REIT rules and, as the Government have said, seek to remove superfluous restraints and administrative burdens. That includes the removal of the requirement for REIT shares to be admitted to trading in certain circumstances; the amendment of the definition of an overseas equivalent of a UK REIT; the amendment of the “holder of excessive rights” charge to corporation tax; and changes to the rules which ensure that a REIT’s business is primarily focused on its property rental business. The changes take effect from 1 April 2022.

A REIT is a company through which investors can invest in real estate directly. Specific tax rules for UK REITs were introduced in the Finance Act 2006. The regime has proved popular, and the number of UK REITs steadily increased to 92, as of June 2021. Subject to meeting certain relevant conditions, the company may notify Her Majesty’s Revenue and Customs that it is to be treated as a UK REIT. Its property rental profits and gains are then, in broad terms, treated as exempt from corporation tax, subject to ongoing conditions such as the requirement to distribute 90% of its exempt profits as property income distributions, which are in turn treated as property rental income in investors’ hands.

At Budget 2020, the Treasury launched a consultation on the tax treatment of asset holding companies, which included questions about investments in real estate. Responses to the consultation led to the inclusion of proposals for changes to the REIT regime in a second consultation on asset holding companies, which was launched in December 2020. The schedule introduces those changes, which are intended to remove restrictions and administrative burdens where they are no longer necessary. For that reason, we do not oppose the clause or schedule.

[Alison Thewliss]

I have a question about transparency and how the regime will interact with the Government’s draft Registration of Overseas Entities Bill. I remember some discussion about people moving ownership to trusts and other things, but I am not quite clear how this interacts with that work on transparency.

[Lucy Frazer]

I am grateful to the hon. Member for Ealing North for indicating that he will not oppose this aspect of the Bill. As he has said, the regime is very popular. I am very happy to get back to the hon. Member for Glasgow Central on her particular question.

Question put and agreed to.

Clause 15 accordingly ordered to stand part of the Bill.

Schedule 3 agreed to.

Clause 16

Film tax relief: films produced to be television programmes

Question proposed, That the clause stand part of the Bill.

--- Later in debate ---

[James Murray]

As we have heard, clause 16 allows films to remain eligible for film tax relief even if those films are no longer intended for theatrical release, provided they are intended for broadcast and meet the four conditions required for high-end television tax relief. The clause is effective for accounting periods ending on or after 1 April 2022. We do not oppose measures that support the entertainment and hospitality industry, particularly given the ongoing challenges brought about by the covid-19 pandemic. Indeed, the measures contained in clause 16 are, in themselves, sensible and appropriate.

More widely, though, we are aware that film tax relief was introduced by the Finance Act 2006, and applied only to films intended to receive theatrical release. That intention must be met at the end of every accounting period. Similarly, high-end television tax relief was introduced by the Finance Act 2013, and allows companies to claim relief on television programmes so long as they meet certain conditions.

The intention to broadcast must be met at the outset of production activities, and is then treated as being met for the remainder of production activities, regardless of the intention for the programme. That raises the possibility that a film that was initially intended for theatrical release may miss out on either relief if the intention changes part-way through production, and it is instead planned to have a television release. This is the case even when such a film would have been eligible for television tax relief if the decision had been made at the very start of production activities. Clause 16 ensures that where a film would have been eligible for high-end television tax relief if not for the date that the broadcast intention was decided on, it will not miss out on that relief, but will be eligible to claim it.

I am sure that the measures in this clause will provide welcome relief to those in the film industry. However, we would like to take this opportunity to ask the Minister about the operation of the film tax relief more widely, which is a debate that our new clause 14 seeks to encourage. Looking back briefly to 2014, the Public Accounts Committee reported on the misuse of tax relief, including the film tax relief, to which it made explicit reference. The report found:

“There is a lack of transparency and accountability for tax reliefs and no adequate system of control, following their introduction….Tax expenditures are often alternatives to spending programmes, but are not managed or evaluated as closely…The Departments do not keep Parliament adequately informed of changes in the costs of reliefs…The Departments are unable to cope with the demands of an increasingly complex tax system, including tax reliefs…The Departments do not respond promptly to unexpected increases in the costs of tax reliefs. Data on movements in the cost of reliefs is not available until tax returns are received, and HMRC takes time to react when it notices a cost increase, as it wants to ensure its response is appropriate. However, a longer elapsed time in reacting to an increase in the cost of a tax relief raises the total amount of public money at risk. In the case of film tax relief, it took ten years to resolve the problems and cost over £2 billion.”

I am aware that the operation of the film tax relief has been changed in recent years, but it is important to ensure that the tax relief continues to be effective. We need the Government to reassure us that they are taking adequate action against the possible misuse of tax reliefs. With that in mind, we tabled new clause 14, which would require the Government to include an assessment of the extent of, and potential for, misuse of the relief provided in clause 16. That assessment must also include an evaluation of the misuse of existing film tax relief more widely.

In relation to that wider potential misuse of existing film tax relief, our new clause requires the Government to set out, first, the number of total and successful enforcement actions taken against companies suspected of misusing film tax relief; secondly, a report of what action has been taken against the promoters of schemes designed to enable to misuse of film tax relief; and thirdly, what plans the Government have for further action against the misuse of film tax relief in the future.

The Minister has set out that she will not accept our new clause, but I ask her to commit to a firm timetable for a review of existing film tax relief that would have a similar effect. There are already reports suggesting that the use of film tax relief is increasing. I remind her that the 2014 Public Accounts Committee report said that

“Departments do not respond promptly to unexpected increases in the costs of tax reliefs.”

If the Minister will not commission a review along the lines that we have suggested, I would be grateful if first she could reassure us on the record that she does not believe that there are significant levels of misuse of film tax relief. Following the point that she made earlier, I would be grateful if she could also explain what the timetable is for the publication of the evaluation of film tax relief. If she does not have that to hand, could she write to me before the recess?

[Alison Thewliss]

I am more than happy to support what the Government are proposing here. Consistency in these tax reliefs is really important to allow businesses to plan. My constituency particularly has a booming TV and film production sector, with the recent announcement of the BBC Studioworks development at Kelvin Hall in my constituency, and an £11.9 million investment, £7.9 million of which is coming from the Scottish Government to invest in the high quality TV and film production in Glasgow.

It is important to acknowledge the wider picture. This is not just about one tax relief; it is about the wider ecosystem. We have lots of independent production companies in Glasgow Central, and more widely in Glasgow, working away and producing high quality stuff. We have post production as well in companies such as Blazing Griffin, which does high-end stuff for the likes of Netflix. However, I would be doing them all a wee bit of a disservice if I did not mention the significance of Channel 4, and the importance of keeping it in its current model and standing away from the plans to privatise it. That model is what supports the wider ecosystem in the city of Glasgow—the model where independent production companies are able to keep their intellectual property and products, and sell them. That allows all the certainty within the sector to continue.

As I said, the issue is not just about this one tax relief; it is about the Government looking at and acknowledging the wider ecosystem that supports independent production within Glasgow. Companies such as Blazing Griffin have pointed out to me that, were it not for Channel 4, we would not have Netflix. One thing in the ecosystem depends on another, and I urge the Government to look at that in the round when it considers such tax reliefs. Where tax reliefs have been withdrawn or changed in the United States, all that happens is that production companies lift and shift, and go elsewhere. We do not want to risk doing that with such changes as those that the Government propose for Channel 4.

[Lucy Frazer]

I will briefly respond to the points made by the hon. Member for Ealing North. There are four short points: first, I hope the hon. Member has taken some reassurance from the fact that I mentioned that the current regime is not subject to the same abuse as the historic regime. Secondly, I mentioned that we were doing an independent review of reliefs. Thirdly, he asked me for the timing of that project. It started in May 2021, and we expect the project to be finished and to have written a report before the end of March 2022, for publication later in the year.

The hon. Member also mentioned avoidance quite a lot; we are also interested in tackling avoidance, and we will be coming to, later on in this Committee, a whole raft of measures tackling promoters. I am sure that he will welcome those.

--- Later in debate ---

[Alison Thewliss]

Of course, I support the proposed tax credits. They will be a useful part of the picture of support for theatres, museums and orchestras, of which there are many in my constituency of Glasgow Central—which is, of course, the best constituency in the country, as I am sure everyone would agree. We have the Royal Scottish National Orchestra, the BBC Scottish Symphony Orchestra and Scottish Ballet, as well as Tron Theatre company and the Citizens Theatre company. These proposals may be of assistance to them, so I ask the Minister what communication has been put out to the sector to ensure that it is aware of the relief and taking it up as required.

I share the concerns expressed by the hon. Member for Ealing North, and I, too, seek answers from the Minister to the questions that the hon. Gentleman asked. It strikes me that many of these proposals provide assistance for productions of some kind, but that misses the other side of the equation. It is good to support companies, but if the venues and theatres in which they wish to perform go bust because they do not have the support that they need, that will not solve the problems that the companies have faced for the past year as a result of the pandemic. I urge the Minister to look at support for the sector more widely.

Many who work in the sector—in orchestras and in theatres, behind the scenes and on the stage—are freelancers, and many have received no support whatsoever from the Government during the pandemic. They have faced a very difficult time, and the Government need to resolve that part of the equation. They could perhaps do so by looking at extending the VAT relief that they introduced, as the SNP has called for.

We were very glad that the Government brought in the reduction in the rate of VAT, but it would be useful to see that continued beyond the cut-off in April next year. That would give a sector that has faced such a difficult time a bit of extra support into next year. It does not make much sense to me to cut that off, and not to incentivise people to go out and make use of the theatres and music venues we all have in our constituencies.

The sector has had a very difficult time. The proposed tax credits are useful, but we need to look at the wider picture. If there is no venue in which to perform or to showcase an orchestra, ballet, theatre production or pantomime, because those venues have gone bust and no longer exist, the Government are missing a trick. It is important that we support the venues and those who work in the sector, wherever that is, and that we look at the wider picture, rather than at a narrow bracket of tax reliefs.

[Lucy Frazer]

The hon. Member for Ealing North asked about world heritage sites. The answer to his question is that a world heritage site would be considered to be a site of cultural significance. It would be considered as an exhibition and would qualify, so long as it is maintained by a charity or local authority.

The hon. Gentleman recognised that those who had commenced productions before 27 October would not qualify for the relief. He is right about that, although we have doubled relief until 2023 and increased it until 2024. Productions that started before the announcement have been able to benefit from the normal rates of relief and the comprehensive package of support provided for the cultural sector over the pandemic. They will continue to benefit from relief at the 2020-21 rates. It is important, and we have made it clear, that these proposals relate to new activity, because it is new activity that we want to support through this particular relief.

The hon. Gentleman also asked about touring and musicians. HMRC has recently issued further guidance where industry has asked for it, in relation to the interpretation of the legislation. I will get back to him about those two points.

The hon. Member for Glasgow Central made a few points; I am afraid I must challenge her on her statement that Glasgow Central is the best constituency in the country. The best constituency is, of course, South East Cambridgeshire—fortunately, no one will have an opportunity to respond to that. She made an important point about communication. The Chancellor mentioned these reliefs in the Budget statement and they were included in all the communications about it at the time, which were highly publicised. The hon. Lady makes an important point, however, and I will continue to ensure that when we make reliefs, those who qualify for them are aware that they do. We are doing quite a lot of work on how to spread the message more broadly to enable companies to take up the reliefs that the Government offer.

[Alison Thewliss]

The point is that large production companies will have accountants who will know what those companies are eligible for, but smaller companies might not even be aware of what is available because they are too small to fill in the paperwork. They may need extra support to do so. Anything the Government could offer in that regard would be useful.

[Lucy Frazer]

That is a valuable point. I know in my constituency that small organisations got a variety of grants from the Arts Council and were able to access those reliefs, but I will discuss that point further with my officials. I thought the hon. Lady might want to intervene on the question of which constituency is the best in the country.

[Alison Thewliss]

There is no question!

[Lucy Frazer]

I commend the clauses to the Committee.

Question put and agreed to.

Clause 17 accordingly ordered to stand part of the Bill.

Clauses 18 to 22 ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Alan Mak.)

Finance (No. 2) Bill (Second sitting)

Alison Thewliss Excerpts

Committee stage
Tuesday 14th December 2021 Public Bill Committees

I would be grateful if the Minister could respond to two points. First, can she comment on whether she personally feels it is acceptable for a Government Minister, or officials acting on their behalf, to brief the press on Budgets before the House of Commons? Secondly, what assessments has she made of the consequences of this premature briefing, in terms of whether any private company or individual could have profited from advance knowledge of legislation before it was presented to Parliament?

[Alison Thewliss (Glasgow Central) (SNP)]

I support the comments made by the Labour Front-Bench spokesperson on this issue. Switching flag is the most crazy kind of gesture politics. Would it not have been better to look at green shipping? That would create a tax incentive for the industry, which is one of the leading contributors to emissions, to transfer to better forms of power, to reduce its carbon emissions and to have some positive impact on global emissions and the net zero target, rather than pursuing the gesture politics of switching flags on a ship.

[Helen Whately]

As I set out, the clause reforms the UK’s current tax regime to help the UK shipping industry grow and compete in a competitive global market. Overall, this will be to the benefit of our maritime industry and, therefore, to the UK as a whole, supporting GDP, tax revenues and jobs in the UK.

I will pick up on a couple of comments made by the Opposition Front-Bench spokespeople. On the points made by the hon. Member for Erith and Thamesmead, the clause is all about helping our shipping industry compete in a global market and making sure firms are not disadvantaged compared to those operating in other countries. It comes at a minimal cost to the Exchequer and we expect to see tax revenues in the sector increase as a result, because it will mean that more shipping groups are likely to headquarter in the UK. That will bring tax advantages and benefits to the UK, as well as tens of thousands of jobs that relate to that.

On the second point that the hon. Member made, I emphasise that the Treasury takes the recommendations of the Macpherson review very seriously and follows them in full. The reforms to our tax regime were rightly announced some months before they will come into force, in April next year.

The hon. Member for Glasgow Central talked about environmental factors. As part of the reforms, HMRC expects to update the guidance on assessing eligibility for the tonnage tax regime, and environmental factors will be considered as part of that, so it can help us on decarbonisation actions and ambitions.

Finance (No. 2) Bill (Third sitting)

Alison Thewliss Excerpts

Committee stage
Wednesday 5th January 2022 Public Bill Committees

In summary, we will not oppose this group of clauses, but I hope that in her reply the Minister will be able to answer the questions that I have set out. In particular, I would be grateful if she could fully address the questions that I have raised in relation to clause 36: specifically whether RP developers would be liable to the RPDT if they either held the units on a piece of land for 10 years as build-to-rent or if they retained a long-term interest as a freeholder landlord.

[Alison Thewliss (Glasgow Central) (SNP)]

A happy new year to you, Dame Angela, and to all colleagues.

I have just a few queries about these clauses. First, I want to touch on the issues relating to exempting registered social landlords. During the consultation, the Scottish Federation of Housing Associations asked the Government to exempt all non-profit housing providers and wholly owned subsidiary companies. It highlighted the social housing sector’s concerns that developers would look to pass on costs where properties are purchased off the shelf, as it were, rather than housing associations doing it themselves, and it was very pleased that it had that exemption as part of the rules that the Government are introducing. That is very welcome, and I am glad that has been the case.

A “registered social landlord” is defined in clause 34(4)(b), and paragraph (c) refers to the Housing (Scotland) Act 2010. Does the Minister intend to keep in touch with the Scottish Government should there be any further changes to Scottish legislation that might be impacted by the Bill? The definition of a registered social landlord in Scotland is slightly different from that in England. An RSL is not allowed to be for-profit in Scotland, and that is very clear in the legislation. I understand that on the English register there are 1,625 providers of registered social housing, 60 of which are classed as for-profit.

Out of curiosity, has the Minister or her colleagues had any discussions with the for-profit organisations? Looking at some of the names, I think that some of the people they seek to provide housing for appear to be reasonably laudable causes—people we would wish to support—even though it is through for-profit social housing. I am curious about what the impact might be on the sector as a result.

On clause 34(5) and the point made by the hon. Member for Ealing North, it is important that a lot of the measures are going to secondary legislation and we will lose sight of any future changes that the Government make to the definitions of non-profit and any other definitions that they seek to make. How does the Minister intend to report that back to the House in a way that allows Members to ensure that there will be no unintended consequences from things that happen once the Bill leaves Committee?

On the definitions of residential property in clause 37 and the exemptions in subsection (2), I was interested to see that student accommodation is a part of this. In many respects I agree with student accommodation being exempted, particularly accommodation run by universities themselves for no profit. Universities looking not to make a profit but simply to make the accommodation pay for itself are very different from the rapacious student accommodation providers that seek deliberately to make profits from students. Some of the fees that they can charge and the developments that they create are sizeable.

There are huge accommodation providers in Glasgow Central. They have a worthy goal in providing accommodation for students, but students have to pay through the nose for it and they are not quite in the same classes of accommodation. What conversations has the Minister had with student accommodation providers, both those working on a non-profit basis and those working on a commercial basis? It is clear that there are implications from cladding on student accommodation. Unite was mentioned in the press as having in its portfolio 22 high-rise buildings that are affected by cladding. I understand that it is meeting the cost of removing the cladding but, as I say, it is a profitable business in many respects. What more can the Government tell me about their conversations on that?

My other points were covered by the hon. Member for Ealing North, but I have one final point about the preparedness of HMRC to implement the significant and complex new tax. My hon. Friend the Member for Gordon mentioned the complexity. When legislation starts to get into equations, we are talking about something that is quite complicated, especially when we look at the detail in the clauses and the schedules that follow them. What preparations is HMRC meant to be making for this? HMRC has had a busy couple of years, given all the things it has had to do as a result of coronavirus. A lot of that was done at pace, with other stuff put to the side, and I wonder whether this might be one thing that was put to the side while HMRC dealt with coronavirus.

It is clear from some of the press coverage of the coronavirus schemes that HMRC did not have the staff to check up on where the money was going, and that it has been trying to claw back some of that money without the staff complement to do that properly and fully. I would like to know from the Minister the size of the team that has been working on this and what more needs to be done to ensure that this goes smoothly in April 2022.

--- Later in debate ---

[Abena Oppong-Asare]

I thank the Minister for her explanation of clause 72; it does seem like a straightforward clause that simply moves the criteria for determining where the risk is located into primary legislation. The Chartered Institute of Taxation has stated that the legislation does meet its stated objectives. For that reason, we do not oppose the clause.

I note that there has been wider consultation on the insurance premium tax, including on how to address the avoidance of the tax and how to reduce the administrative burden on HMRC and the industry. That is particularly important as HMRC has been under a lot of pressure—particularly during the pandemic. In the Government’s response to the consultation on the issue of IPT avoidance, they said that, on reviewing the responses,

“neither of the proposed options provide a proportionate solution to the issue this chapter sought to address. As such, neither option will be taken forward at this time.”

That seems like the Government have given up at the first hurdle. Why, if the proposed measures are not appropriate, are the Government not considering other measures to prevent avoidance in this sector?

[Alison Thewliss]

I do not have any major objections to what is being proposed, but I would be doing the Association of British Insurers a disservice if I let the clause go through without mentioning its concern, which I share, that insurance premium tax is quite a regressive tax. We are about to discuss tobacco duty; the ABI points out, through some research by the Social Market Foundation, that insurance premium tax now raises more revenue than beer and cider duty, wine duty, spirits duty, or betting and gaming duties.

Since 1994, the standard rate of IPT has increased more rapidly than tobacco duty. Those are all things that we want people not to do; we would prefer it if people did not drink as much, smoke as much or gamble as much, so we tax those things. It seems ludicrous to tax people on insurance, which we would like people to have and which benefits them and society, so I ask the Minister to consider further whether insurance premium tax is something sensible that we want to keep doing.

[Lucy Frazer]

I am grateful to the hon. Member for Glasgow Central for her broader points about the subject matter. I do not think she raised a particular point in relation to the clause under consideration, but this is an area that, like others, we will keep under review. I undertake to get back to the hon. Member for Erith and Thamesmead in writing on the specific point that she raised in relation to the consultation.

Question put and agreed to.

Clause 72 accordingly ordered to stand part of the Bill.

Clause 73

Transitioned trade remedies: decisions by Secretary of State

Question proposed, That the clause stand part of the Bill.

--- Later in debate ---

[Abena Oppong-Asare]

I thank the Minister for her explanation of the clause, which introduces technical amendments to the changes introduced to restrict the entitlement to use rebated fuel, more commonly known as red diesel. We discussed the substance of that change in Committee on the last Finance Bill. As I said then, we support the intention behind the Government’s measure. There is a clear need to ensure that fuel duty rebates are as limited as possible in order to meet our net zero commitment.

The amendments made by this Bill are technical in nature, and we do not oppose them. However, will the Minister set out which, if any, industries will be affected by the changes and what work is being done to ensure that they are prepared, given that we are now only a few months from the introduction of the changes? Will she also update us on preparations by Her Majesty’s Revenue and Customs and other agencies for the changes? Is she confident that the Government will be able to ensure compliance from April this year? The Minister’s colleague, the Financial Secretary to the Treasury, mentioned that there has been some restructuring around HMRC, but I echo the earlier comments by the hon. Member for Glasgow Central and my hon. Friend the Member for Ealing North, who explained that HMRC has been busy for a number of years. Will the Minister update us on what work has been done to ensure that we are prepared for this change?

[Alison Thewliss]

I am glad that the definitions are being amended to include fairs and circuses, of which there are many in my constituency, to allow them to continue to use rebated diesel and biofuels after 1 April 2022. In that industry it is quite difficult to adapt machines to use other sources. The showpeople I represent will be pleased that the Government have listened on this measure, and I thank the Minister for that.

[Helen Whately]

I welcome the support that the hon. Member for Erith and Thamesmead expressed for the intention behind this measure and her recognition that the changes are of a technical nature and that the Opposition therefore will not oppose the clause. I assure her that there has been substantial consultation on the overall policy. Indeed, as the hon. Member for Glasgow Central said, the Government have listened, and that is reflected in some of the changes. I am confident in HMRC’s ability to monitor compliance.

Question put and agreed to.

Clause 75 accordingly ordered to stand part of the Bill.

Schedule 10 agreed to.

Clause 76

Rates of tobacco products duty

Question proposed, That the clause stand part of the Bill.

Finance (No. 2) Bill (Fifth sitting)

Alison Thewliss Excerpts

Committee stage
Tuesday 11th January 2022 Public Bill Committees

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

It is a pleasure to serve under your chairship again, Sir Christopher. I thank the Minister for her explanation of clauses 95 and 96, particularly in respect of discovery assessments. As she says, clause 95 will amend the Taxes Management Act 1970 to provide certainty that HMRC can use discovery assessments to make good a loss of tax where it discovers that certain charges have not been accounted for; when the Bill gains Royal Assent, the clause will apply both retrospectively and prospectively.

The amendment to the 1970 Act has to be understood in the context of the legal challenge in HMRC v. Wilkes, in which the upper tribunal ruled that HMRC could not use discovery assessments to assess tax charges arising from sources that do not meet the definition of income within the relevant provision. Clause 95 will amend the law to enable HMRC to use discovery assessments in such circumstances. The background note in the explanatory notes states that the aim is to

“put the matter beyond doubt and confirm HMRC’s long-standing policy”.

Although there has clearly been historic doubt and an unsuccessful legal defence mounted by HMRC, and while this is being applied retrospectively, there is an exception for those who have appealed on the grounds that HMRC was inadequate at the time prior to the Wilkes case. However, as the Minister probably knows, the Low Incomes Tax Reform Group has raised the point that the retrospective application in the clause could be uneven and unfair.

While those who have appealed have been exempted, those who did not make the necessary appeal will face retrospective charges. Those who accepted the charge at face value and paid it will clearly not get their money back, despite the upper tribunal’s finding that HMRC’s use of discovery assessments in this way was outside the scope of its powers and, therefore, not legal. The Wilkes judgment will soon no longer be a legitimate basis for legal contest; I would be grateful if the Minister could make an assessment of the fairness of this uneven, retrospective application.

Under clause 96, there will be further amendments to the Taxes Management Act 1970. It will amend section 7 and extend the circumstances in which a person must make a notification under section 7 to the charges listed in section 30 of the Income Tax Act 2007. As the Minister mentioned, that requires the taxpayer to notify HMRC of any liability to income tax or capital gains tax charges per accounting year. The amendments to the fundamental piece of primary legislation have been extended to include liability, as set out in clause 95. For this reason, we will not be opposing the clause.

[Alison Thewliss (Glasgow Central) (SNP)]

It is a pleasure to see you in the Chair, Sir Christopher. While we support its broad principles, this type of clause brings me out in a cold sweat. I completed my self-assessment tax return last night, and I am now worrying that I have not done it right and at some point in the future HMRC will come running after me because I have ticked the wrong box on the form somewhere.

The clause goes to the sense of a lot of the things to do with the higher income child benefit charge, particularly this retrospective aspect. Since it was introduced in 2013, there have been challenges around the charge, in terms of people knowing about it and the way in which the system works. The child benefit and HMRC systems do not necessarily talk to one another, and people have been brought into self-assessment without realising it.

I can use myself as an example. When I first phoned HMRC to ask about the issue, it asked, “What is your husband’s income?” I said, “I have no idea—it is his income. It is nothing to do with me.” Many people will not know their partner’s income. There may be reasons why the partner does not want to tell them their income, and that will leave them in a very difficult position. People may be in a relationship of coercive or financial control, and they may not be aware of their partner’s income but may end up falling into liability under the rules that the Minister has set out.

What kind of mitigation, if any, may be put in place should people in future be held liable for something they were not aware of for entirely legitimate reasons? Will there be any such mitigation, or will HMRC try to claw back all the money regardless of the person’s situation? Many people may end up in a situation where they are having income clawed back that they were not aware of. How do the Government intend to continue to raise awareness of the higher income child benefit charge and whether people are going to be affected by it?

As the Low Income Tax Reform Group point out in its excellent evidence to the Committee,

“The number of families affected by the charge has increased substantially since it was first introduced because the £50,000 threshold has not been uprated for nine years”.

The effect is that every year it affects more people, who are then drawn into the charge without being aware of it.

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[James Murray]

As we have heard, clause 98 relates to the power to make temporary modifications of taxation of employment income. The clause will grant the Treasury the power to make regulations to modify temporarily parts 3, 4 and 5 of the Income Tax (Earnings and Pensions) Act 2003 under ministerial direction, in the event of a disaster or emergency of national significance. The regulations must set out which disaster or emergency they are made in respect of, and the powers can be exercised only in a way that is wholly relieving to the taxpayer and cannot be used to create a tax charge.

This measure has been introduced in the context of the covid-19 pandemic, and indeed covid has highlighted the limited scope to make changes to the current benefits in kind and expenses rules to respond quickly to the pandemic. We understand that the aim of clause 98 is to enable changes to primary legislation to be made rapidly in response to significant national events. In that respect, we do not oppose this clause, provided that it is applied in strictly exceptional circumstances of national importance.

The clause uses the terms “emergency” and “disaster”, but a specific description of these criteria is missing. I would be grateful if the Minister set out what the Treasury would consider to be an emergency or disaster. Without a doubt, the onset of the covid-19 pandemic was a good example, but without a robust and transparent framework to guide the Treasury—given that the use of the power seems to be at its sole discretion—it is important that we are clear about the circumstances in which income tax liability can effectively be waived. Moreover, clause 98 notes that such measures would be temporary and would not apply longer than necessary. Again, guidance and a framework are conspicuously lacking, as the Government has provided no definition of “temporary”.

Early in the covid pandemic, emergency measures were needed, but as the pandemic has gone on the need for emergency measures has lessened. I would be grateful if the Minister assured us that a clear and transparent framework for establishing what constitutes “emergency”, “disaster” and “temporary” will be published, and when. If not, why not?

I am sure that we agree that this is a matter of effective policy rather than politics. As I have said, the context in which the clause has been introduced is uncontroversial, but I would be grateful if the Minister addressed this ambiguity and assessed whether the measure could be applied in a manner that deviates from its stated intention.

[Alison Thewliss]

I agree very much with what the Labour Front-Bench spokesman has said. Clause 98 is very wide-ranging, and vague in a lot of ways. It is important to understand its scope, because one person’s definition of a disaster or emergency might be quite different from another’s. It is important that we define that slightly more than is the case in the clause, which states that the regulations

“may only specify a disaster or emergency which the Treasury considers to be of national significance.”

That could be a lot of things, depending on how the Treasury considers it.

I wonder whether the Minister, in looking at the clause, has taken into account the findings of the Public Accounts Committee and the National Audit Office on the Government’s lack of financial preparedness, specifically coming into the pandemic. There was a lot of talk about medical preparedness, stockpiling and things like that, but both the National Audit Office and the Public Accounts Committee found that there was no preparedness in the Treasury for a pandemic or national emergency of this type.

It would be useful to know what further work, in addition to clause 98, Treasury officials are putting in place to ensure that, should something like this occur in future, the box of learning from this pandemic can be taken off the shelf and easily applied, without having to make a load of new provisions and regulations, so that things are ready to go, and we do not have to scratch around, trying to figure out what happened last time. Another pandemic may occur in five years or 50 years—we do not know. Certainly, our hope in the SNP is that we will not be here in 50 years, if not five, but it would be useful to know what provisions are being considered in the Treasury to ensure that the learning from this pandemic sits very tightly with this clause and can be applied very easily.

[Lucy Frazer]

I thank hon. Members for their contributions. Both the hon. Member for Ealing North and the hon. Member for Glasgow Central asked us to be more prescriptive in the legislation—to define the circumstances in which there would be a disaster or emergency—but we are bringing in this legislation precisely because we did not have the flexibility that we needed when we went into this pandemic. Therefore we do not want to tightly define the circumstances. We are bringing in this legislation to ensure that we have the tools at our disposal to exercise the necessary powers should an event like the one we have been through and hopefully are at the end of occur.

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The hon. Member for Glasgow Central talked about lack of financial preparedness from the Treasury. The Chancellor’s response to the pandemic has been recognised by a number of international financial institutions as including some of the most effective measures put in place in Europe and across the globe. The measures that the Chancellor has put in place have avoided significant unemployment—when we went into the pandemic we expected 12% unemployment, but it is much less than that. Two million fewer people are unemployed than we originally expected.

[Alison Thewliss]

My point was not about the reaction to the pandemic but preparedness. All the systems had to be put in place suddenly and with little planning. There has been significant fraud in many of the schemes as a result of the lack of tight planning. They were reactive emergency measures. Does the Minister agree that it would have been much better for all those things to have been set out clearly, so they could be taken off the shelf should they be needed? Instead, they were reactive measures that had not been planned ahead of time.

[Lucy Frazer]

The hon. Lady is right to say that a number of measures were reactive, but they were brought it at extremely quick pace and were effective pretty much immediately. She makes a valid point about learning; I know the Treasury is learning and has learned throughout the pandemic. The schemes we put in place at the outset have been refined, including the self-employment income support scheme, the furlough schemes and the coronavirus job retention scheme.

The hon. Lady mentioned the level of fraud; as the pandemic went on and the measures were refined, fraud reduced. She makes a valuable point about learning, and I am sure all Departments are learning. We do not want to be in this position again, which is precisely why we are bringing forward this legislation, to ensure that we are ready for any other emergency that should come our way.

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[The Chair]

We have not quite got there yet. We have some new clauses to consider after these clauses, but thank you very much for those comments.

[Alison Thewliss]

I was also going to thank people, but I am aware that we have new clauses. If you would rather that I waited until we have finished those, Sir Christopher, I will do so. [Interruption.] I am prompted by the hon. Member for Wolverhampton South West to thank Members for their indulgence of the many new clauses and amendments that we have tabled in Committee.

I will also take the opportunity to thank you, Sir Christopher, and the other Chairs for their smooth running of the Committee, and the Clerks for all their expertise and advice—especially Mr Stanton, as was mentioned by the hon. Member for Ealing North. Without the Clerks and their advice, we would have found it very difficult to put all these amendments together, and I thank them very much for that. I will also take the opportunity to thank Scott Taylor and Gus Robertson from our research team. They have now left—I do not think it was the Finance Bill that did it—and I wish them all the very best in their new jobs. I also thank Jonny Kiehlmann from our research team for his assistance, and the Ministers and Opposition Front Benchers for their comments.

A lot of the proposals we have tabled reflect the limitations that we, as the Opposition, face in moving amendments to the Finance Bill. We wish that there were a better process for this—rather than just calling for reports and things of that kind, we would like to be able to make substantial changes to the legislation before us—but that is not the way that things work in this House. It would also have been useful to take evidence from those who sent us written evidence, but I thank all of those who took the time to submit substantial written evidence to this Committee, because it gives us a great deal of assistance in making comments on the Bill. We will now go on to move our new clauses, which I am sure Members are all looking forward to.

Finance (No. 2) Bill

Alison Thewliss Excerpts

Report stage
Wednesday 2nd February 2022 Commons Chamber

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 (Glasgow Central) (SNP)]

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.

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[Alison Thewliss]

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.