Asked by: Andrea Leadsom (Conservative - South Northamptonshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, when he plans to reply to my email correspondence of 9 November 2022 from a constituent on FairCharge.
Answered by Victoria Atkins - Secretary of State for Health and Social Care
The correspondence from 9 November 2022 has now been answered.
Asked by: Andrea Leadsom (Conservative - South Northamptonshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will (a) make a statement on his assessment of the impact of the loan charge on families and (b) make an assessment of the potential merits of introducing a right of court appeal for people experiencing significant contested charges.
Answered by Lucy Frazer - Secretary of State for Culture, Media and Sport
The Government takes concerns about the wellbeing of all taxpayers very seriously and recognises that the Loan Charge can add a significant pressure for some taxpayers.
The impact of the Loan Charge on those affected was assessed ahead of the introduction of the policy and was considered as part of the Independent Loan Charge Review, led by Lord Morse in 2019.
The November 2017 Tax Information and Impact Note which covered the Loan Charge stated that it was not expected to have a material impact on family formation, stability, or breakdown, because the impact was assessed across the entire UK population, of which users of affected avoidance schemes make up a very small minority.
In his independent review, Lord Morse recommended that future published Government impact notes of tax changes should consider the direct impact on the affected population, rather than looking at the impact across the entire UK population. This is one of the 19 recommendations that the Government accepted to mitigate the impact of the Loan Charge and to ensure that the right support is in place for those who need it.
HMRC’s powers are balanced by a comprehensive suite of safeguards for taxpayers, and the Loan Charge follows these. All taxpayers have the right to appeal tax decisions made by HMRC, and that right includes the opportunity to appeal to an independent tribunal. Where someone disagrees with HMRC’s assessment that the Loan Charge applies, they are able to appeal that decision.
Asked by: Andrea Leadsom (Conservative - South Northamptonshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, for what reason HMRC did not reject tax returns where loan charge schemes were listed in the most recent period for which data is available.
Answered by Jesse Norman
HMRC cannot reject Self-Assessment tax returns on the basis of information contained within the returns, including information relating to the Loan Charge or disguised remuneration schemes. Self-Assessment is a process now, check later regime. A Self-Assessment tax return would only be rejected if it fails to satisfy the filing requirements to constitute a statutory return. The Self-Assessment regime also gives HMRC the powers to open an enquiry into a return up to the end of a period of 12 months if the return was filed on or before the statutory filing date.
HMRC have also recently provided guidance on GOV.UK for taxpayers following the outcome of the independent Loan Charge Review which includes information for those taxpayers who have filed or are yet to file their 2018-19 Self-Assessment tax return: https://www.gov.uk/government/publications/disguised-remuneration-independent-loan-charge-review/guidance.
Asked by: Andrea Leadsom (Conservative - South Northamptonshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment the Government has made of the potential infringement of privacy as a result of amendments to HMRC’s civil information powers.
Answered by Jesse Norman
There are strong legal restrictions on HMRC’s use of their civil information powers. These restrictions protect taxpayer privacy and have not been affected by the amendments to HMRC’s civil information powers.
All HMRC requests for documents and information issued under these powers must adhere to strict criteria. These must be reasonably required for the purpose of checking the tax position or collecting a tax debt of a taxpayer. Safeguards introduced with the Financial Institution Notices ensure that HMRC will maintain this standard. For example, the notices must be approved by an authorised officer who must pass a test every three years to retain their status. Taxpayers and financial institutions can challenge HMRC’s decision to issue a notice using the judicial review procedure. A review on the use of this power will also be reported annually to Parliament.
HMRC have consulted with the Information Commissioner’s Office to ensure this legislative change complies with UK GDPR and identify and minimise any associated data protection risks.
Asked by: Andrea Leadsom (Conservative - South Northamptonshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the compatibility of the retrospective application of the Loan Charge with the standard principles of the UK's tax regime.
Answered by Jesse Norman
The Loan Charge was legislated in Finance Act 2017, following the normal Parliamentary process.
The Loan Charge is not retrospective. It is a new charge on disguised remuneration loan balances outstanding at 5 April 2019 and was announced three years before the legislation took effect.
Lord Morse conducted an independent Review of the Loan Charge. His report was published in December 2019 and the Government welcomed his finding that the Loan Charge was a justified policy to draw a line under use of disguised remuneration tax avoidance.
The Government accepted all but one of the Review’s 20 recommendations. This included a recommendation that the Loan Charge should only apply to disguised remuneration loans which were entered into after 9 December 2010.
Asked by: Andrea Leadsom (Conservative - South Northamptonshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what urgent financial support he is planning to put in place for directors of small businesses who have so far been ineligible for covid-19-related support.
Answered by Jesse Norman
The Government has provided a substantial package of measures throughout this pandemic to protect people’s jobs and livelihoods and to support businesses and public services across the UK, spending over £407 billion. In order to support businesses and employees through the next stage of the pandemic, the Chancellor announced at Budget the extension of the Coronavirus Job Retention Scheme (CJRS) and the Self-Employment Income Support Scheme (SEISS) until September.
Directors who pay themselves a salary through PAYE are eligible for the CJRS. Those paid annually through PAYE have been and still are eligible to claim, as long as they meet the relevant conditions including being notified to HMRC on an RTI submission within the relevant cut-off dates.
There is no practical way to identify directors who have been unable to access the SEISS or CJRS, and then identify the value of support they should receive, without exposing the taxpayer to significant fraud, legal risk and poorly targeted use of public money. The Government has worked closely with business groups on proposals to support directors who pay themselves through dividends. However, no proposal has been able to address the significant fraud risks in relying on self-certification.
The CJRS and SEISS are only two elements of the wider economic support package. Businesses and individuals may have access to further funding announced in the Budget such as the Restart Grant of up to £18,000 to business premises, and an additional £425 million to English local authorities for discretionary business grant funding. The Government is also extending previous VAT reductions and business rates relief, extending the temporary £20 per week uplift in Universal Credit, and has announced a £500 one-off payment to provide similar support to eligible Working Tax Credit claimants.
Asked by: Andrea Leadsom (Conservative - South Northamptonshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether it is (a) a regulatory requirement or (b) a bank decision that a company goes into forbearance automatically if it has four quarters of capital repayment holiday on its bank loan.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
Most business lending - including lending to incorporated entities - is unregulated. The Government is committed to regulating only where there is a clear case for doing so, in order to avoid putting additional costs on lenders that would ultimately lead to higher costs for business customers.
Payment holidays are a form of forbearance and, where the credit is regulated, firms will need to have appropriate policies and procedures in place to treat customers in default or arrears difficulties with appropriate forbearance and due consideration.
The specific type of forbearance offered, including a capital repayment holiday, is a decision made by the lender, as well as how long the forbearance is provided before additional forbearance or litigation action is taken. A lender may choose to review the forbearance offered at a certain point in time to see how successful the forbearance has been.
Furthermore, regulators have also set out their expectations of financial services firms and information for businesses and consumers in the context of COVID-19, to ensure markets continue to function well.
Asked by: Andrea Leadsom (Conservative - South Northamptonshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the potential effect of the end of the VAT Retail Export scheme for overseas customers on (a) Bicester Village and (b) other businesses who rely on regular and mobile international customers visiting the UK.
Answered by Jesse Norman
Ahead of the end of the transition period, the Government has announced the VAT and excise duty treatment of goods purchased by individuals for personal use and carried in their luggage arriving from or going overseas (passengers). The following rules will apply from 1 January 2021:
- Passengers travelling from Great Britain to any destination outside the United Kingdom (UK) will be able to purchase duty-free excise goods once they have passed security controls at ports, airports, and international rail stations.
- Personal allowances will apply to passengers entering Great Britain from a destination outside of the UK, with alcohol allowances significantly increased.
- The VAT Retail Export Scheme (RES) in Great Britain will not be extended to EU residents and will be withdrawn for all passengers.
- The concessionary treatment on tax-free sales for non-excise goods will be removed across the UK.
The Government published a consultation which ran from 11 March to 20 May. During this time the Government held a number of virtual meetings with stakeholders to hear their views and received 73 responses to the consultation. The Government is also continuing to meet and discuss with stakeholders following the announcement of these policies.
The detailed rationale for these changes is included in the written ministerial statement and summary of responses to the recent consultation: https://questions-statements.parliament.uk/written-statements/detail/2020-09-11/hcws448 and https://www.gov.uk/government/consultations/a-consultation-on-duty-free-and-tax-free-goods-carried-by-passengers. A technical note has also been issued to stakeholders to expand on this document and to respond to issues raised by stakeholders.
HMRC estimate that VAT RES refunds cost about £0.5 billion in VAT in 2019 for about 1.2 million non-EU visitors. In 2019 the ONS estimate there were substantially more EU visitors (24.8 million) than non-EU passengers (16.0 million) to the UK. This implies an extension to EU residents would significantly increase the cost by up to an estimated £0.9 billion. This would result in a large amount of deadweight loss by subsidising spending from EU visitors which already happens without a refund mechanism in place, potentially taking the total cost up to about £1.4 billion per annum.
The final costing will be subject to scrutiny by the independent Office for Budget Responsibility and will be set out at the next forecast on 25 November.
Asked by: Andrea Leadsom (Conservative - South Northamptonshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the implications for his policies of the analysis published in September 2020 by the Centre for Economics and Business Research on the decision to end the VAT Retail Export scheme.
Answered by Jesse Norman
Ahead of the end of the transition period, the Government has announced the VAT and excise duty treatment of goods purchased by individuals for personal use and carried in their luggage arriving from or going overseas (passengers). The following rules will apply from 1 January 2021:
- Passengers travelling from Great Britain to any destination outside the United Kingdom (UK) will be able to purchase duty-free excise goods once they have passed security controls at ports, airports, and international rail stations.
- Personal allowances will apply to passengers entering Great Britain from a destination outside of the UK, with alcohol allowances significantly increased.
- The VAT Retail Export Scheme (RES) in Great Britain will not be extended to EU residents and will be withdrawn for all passengers.
- The concessionary treatment on tax-free sales for non-excise goods will be removed across the UK.
The Government published a consultation which ran from 11 March to 20 May. During this time the Government held a number of virtual meetings with stakeholders to hear their views and received 73 responses to the consultation. The Government is also continuing to meet and discuss with stakeholders following the announcement of these policies.
The detailed rationale for these changes is included in the written ministerial statement and summary of responses to the recent consultation: https://questions-statements.parliament.uk/written-statements/detail/2020-09-11/hcws448 and https://www.gov.uk/government/consultations/a-consultation-on-duty-free-and-tax-free-goods-carried-by-passengers. A technical note has also been issued to stakeholders to expand on this document and to respond to issues raised by stakeholders.
HMRC estimate that VAT RES refunds cost about £0.5 billion in VAT in 2019 for about 1.2 million non-EU visitors. In 2019 the ONS estimate there were substantially more EU visitors (24.8 million) than non-EU passengers (16.0 million) to the UK. This implies an extension to EU residents would significantly increase the cost by up to an estimated £0.9 billion. This would result in a large amount of deadweight loss by subsidising spending from EU visitors which already happens without a refund mechanism in place, potentially taking the total cost up to about £1.4 billion per annum.
The final costing will be subject to scrutiny by the independent Office for Budget Responsibility and will be set out at the next forecast on 25 November.
Asked by: Andrea Leadsom (Conservative - South Northamptonshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the potential effect of the removal of the VAT Retail Export Scheme on the number of overseas visitors to the UK.
Answered by Jesse Norman
Ahead of the end of the transition period, the Government has announced the VAT and excise duty treatment of goods purchased by individuals for personal use and carried in their luggage arriving from or going overseas (passengers). The following rules will apply from 1 January 2021:
- Passengers travelling from Great Britain to any destination outside the United Kingdom (UK) will be able to purchase duty-free excise goods once they have passed security controls at ports, airports, and international rail stations.
- Personal allowances will apply to passengers entering Great Britain from a destination outside of the UK, with alcohol allowances significantly increased.
- The VAT Retail Export Scheme (RES) in Great Britain will not be extended to EU residents and will be withdrawn for all passengers.
- The concessionary treatment on tax-free sales for non-excise goods will be removed across the UK.
The Government published a consultation which ran from 11 March to 20 May. During this time the Government held a number of virtual meetings with stakeholders to hear their views and received 73 responses to the consultation. The Government is also continuing to meet and discuss with stakeholders following the announcement of these policies.
The detailed rationale for these changes is included in the written ministerial statement and summary of responses to the recent consultation: https://questions-statements.parliament.uk/written-statements/detail/2020-09-11/hcws448 and https://www.gov.uk/government/consultations/a-consultation-on-duty-free-and-tax-free-goods-carried-by-passengers. A technical note has also been issued to stakeholders to expand on this document and to respond to issues raised by stakeholders.
HMRC estimate that VAT RES refunds cost about £0.5 billion in VAT in 2019 for about 1.2 million non-EU visitors. In 2019 the ONS estimate there were substantially more EU visitors (24.8 million) than non-EU passengers (16.0 million) to the UK. This implies an extension to EU residents would significantly increase the cost by up to an estimated £0.9 billion. This would result in a large amount of deadweight loss by subsidising spending from EU visitors which already happens without a refund mechanism in place, potentially taking the total cost up to about £1.4 billion per annum.
The final costing will be subject to scrutiny by the independent Office for Budget Responsibility and will be set out at the next forecast on 25 November.