Finance (No.2) Bill (Fourth sitting)
Debate between James Murray and Kemi Badenoch(3 years, 7 months ago)
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James Murray
Clause 126 enables HMRC and Border Force officers to use a civil penalty to combat the unauthorised removal of things that have been seized in situ. When HMRC seizes goods, they are normally kept, as we heard, in Border Force-controlled warehouses. When goods that have been seized are kept on the trader’s premises, the seizure is known as seizure in situ. Currently, the law does not refer to seizure in situ; therefore, if seized goods are removed without prior authorisation, no penalty can be issued. We recognise that the clause will amend that.
We want HMRC to take robust action to deal with those who import illicit items into the UK or seek to bring in things on which duty has not been paid. We want the detention and seizure of things to be a valuable tool in the fight against duty evasion. We therefore do not oppose the clause.
Question put and agreed to.
Clause 126 accordingly ordered to stand part of the Bill.
Clause 127
Temporary approvals etc pending review or appeal
Question proposed, That the clause stand part of the Bill.
The Exchequer Secretary to the Treasury (Kemi Badenoch)
Clause 127 makes changes to customs and excise review and appeals legislation, to safeguard the right to appeal. To do this, HMRC will be given the power to temporarily approve a business, on application and subject to meeting certain criteria, in order that the business may continue to conduct controlled activities until the conclusion of its appeal into an earlier decision.
As Committee members may be aware, businesses in a number of regimes operated by HMRC require approval before they may conduct certain controlled activities. These include the alcohol wholesaler registration scheme, which regulates the sale of alcoholic drinks, and the raw tobacco approval scheme, which requires the approval of anyone conducting activities involving raw tobacco.
Approval is dependent on a business continuing to satisfy certain fit and proper criteria, which are defined in law. Where evidence shows that the business is no longer fulfilling those criteria, HMRC may, as a last resort, revoke its approval. As with all HMRC decisions, the recipient may request an internal review by an independent officer and, ultimately, has the right to appeal to a tribunal and higher courts.
On receipt of HMRC’s decision to revoke, a business must cease the controlled activity, even where it contests the decision. HMRC currently has no power to pause or suspend its decision, or to allow the business to continue with the controlled activities while it pursues its right of appeal.
Previously, it was believed that where a business sought relief from the courts, such a suspension could be granted. However, comments made by the Supreme Court in 2019 in OWD Ltd v. HMRC highlighted that that may not be the case. If neither HMRC nor the courts have the power to suspend revocation, it could, in theory, cause a business to fail before its appeal has been concluded, fundamentally undermining the right of appeal. It is in order to protect this right that changes are being made. To be clear, the process of temporary approval would apply only in appeals involving civil cases. Those cases where revocation of an approval is linked to criminal prosecution would not be considered.
The changes made by the clause create a new power for HMRC to issue temporary approvals in respect of the control schemes covered by this clause, as they all contain similar fit and proper criteria. Temporary approval would be conditional on the business providing sufficient evidence to support its case that, without that temporary approval, its appeal right is ineffective.
The clause also creates a new appeal right in relation to HMRC’s decision on whether to grant temporary approval. That will ensure that a business has every opportunity to seek protection following a decision by HMRC. The business must demonstrate that it would suffer irreparable harm—rather than just inconvenience—by not being able to conduct the controlled activity in the period between revocation and the outcome of its appeal. That does not alter HMRC’s position that it has judged the business to no longer satisfy the requirements to hold approval; the object of the change is to safeguard appeal rights and not to allow unfit businesses to gain extended periods to trade before an appeal is heard.
The evidential requirements for gaining a temporary approval are intentionally high, to protect revenue and ensure compliance. Any temporary approval would be issued with strict conditions, allowing HMRC to monitor activity closely; any new evidence of unacceptable trading would result in removal of this temporary approval, to protect revenue. HMRC will specify through its public notices the evidence that must be submitted with a temporary approval application, along with details of timings and other relevant matters. The legislation will come into force at a future date to be determined by HMRC and will be brought in by regulations made by statutory instrument.
In conclusion, the clause gives HMRC the power to grant businesses a temporary approval to conduct controlled activities in appropriate circumstances. This power does not currently exist, and it is right that we remedy that situation to provide fairness to taxpayers appealing a decision to revoke their right to trade.
Finance (No.2) Bill (First sitting)
Debate between James Murray and Kemi Badenoch(3 years, 7 months ago)
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The Exchequer Secretary to the Treasury (Kemi Badenoch)
It is a pleasure to serve under your chairmanship, Sir Gary. The clause makes changes to ensure that decommissioning expenditure incurred by oil and gas companies in anticipation of the approval of an abandonment programme, a condition imposed by the Secretary of State or an agreement made with the Secretary of State qualifies for decommissioning tax relief.
Companies operating oilfields in the UK and the UK continental shelf have always been required to decommission the wells and infrastructure at the end of a field’s life. The tax relief for decommissioning expenditure is an important part of the UK’s overall oil and gas fiscal regime, which is balanced to maximise economic recovery of the nation’s national resources while ensuring that the nation receives a fair return for those natural resources. The changes made by the clause will clarify that appropriate expenditure on decommissioning incurred in anticipation of the approval of an abandonment programme, a condition imposed by the Secretary of State or an agreement made with the Secretary of State qualifies for decommissioning tax relief.
The clause does not have any Exchequer costs and does not alter the original policy intent of decommissioning tax relief. It will provide certainty for the UK oil and gas sector, which supports approximately 260,000 jobs, around 40% of which are in Scotland, and which has paid approximately £350 billion in production taxes to date. The clause will provide certainty that all appropriate decommissioning expenditure qualifies for decommissioning tax relief.
James Murray (Ealing North) (Lab/Co-op)
It is a pleasure to be back in Parliament physically and to lead on a Public Bill Committee for the first time under your chairmanship, Sir Gary.
James Murray
You will not be saying that by the end, Sir Gary.
We recognise that this clause makes a largely technical amendment to the Capital Allowances Act 2001, meaning that certain types of expenditure incurred by oil and gas companies on decommissioning plant and machinery before the formal approval of an abandonment programme will qualify for decommissioning expenditure relief. We will not oppose the clause. However, I want to ask the Minister about subsection (9), which introduces a clawback mechanism. It seems to apply when the anticipated abandonment programme has not been approved and the anticipated condition has not been imposed by the Secretary of State, or an anticipated approval has not been given by the Secretary of State within a specified period—namely, five years from the last day of the accounting period during which the expenditure was incurred.
In such cases, there is an obligation on the beneficiary of the relief to notify Her Majesty’s Revenue and Customs of the situation and to set out how any relevant returns are to be amended. Clearly, as with all tax reliefs, there is a risk that some companies might seek to exploit or use them inappropriately. I would therefore welcome the Exchequer Secretary setting out whether she thinks there is any potential risk of the relief being misused. If so, what actions will HMRC take to reduce the risk? What proactive investigations will HMRC make to verify that those taking advantage of the relief are doing so legitimately, and what penalties or other enforcement action will be taken if instances are uncovered where that is not the case?
Kemi Badenoch
I thank the hon. Gentleman for his questions. He raises an interesting point. We have been discussing industry’s concerns for some time over the lack of clarity on decommissioning expenses incurred prior to the approval of an abandonment programme. Industry already supports the measure. We consulted it on the draft legislation, and the clause takes account of comments received, particularly on the clawback mechanism that the hon. Gentleman refers to. We have now excluded the ongoing maintenance costs of assets waiting to be decommissioned from the clawback.
On clawbacks specifically, where expenditure is claimed on decommissioning in anticipation of an approval, the legislation allows five years for that approval to be in place before the clawback is triggered. We listened to industry’s comments during our consultation, and adjustments have been made to the clawback to exclude maintenance costs from the mechanism. The Department for Business, Energy and Industrial Strategy is responsible for overseeing decommissioning work on the UKCS. Where the anticipated approval condition or agreement is not approved by BEIS in the five-year period, it is appropriate for any relief to be clawed back. The legislation ensures that only legitimate decommissioning expenses qualify, and the clawback provides an important protection for the Exchequer.
Question put and agreed to.
Clause 16 accordingly ordered to stand part of the Bill.
Clause 17
Extensions of plant or machinery leases for reasons related to coronavirus
Question proposed, That the clause stand part of the Bill.
Jesse Norman
The clause makes provision for an easement for plant and machinery leases caught by anti-avoidance legislation when extended due to coronavirus. The easement has the effect of turning off the anti-avoidance legislation under specific circumstances. The reason for that is that HMRC has identified an issue where some plant or machinery leases could be adversely affected by the Government’s anti-avoidance legislation. This relates to specific circumstances where a lease is extended due to covid-19, and creates unexpected and unwelcome outcomes for many lessors and lessees. Therefore, at the Budget, the Government announced changes to ensure that the anti-avoidance mechanism is not unnecessarily triggered by legitimate commercial activity.
The measure will affect leases where a relevant change in consideration is implemented between 1 January 2020 and 30 June 2021. It is an easement, restoring eligibility to claim capital allowances to the position as originally intended immediately prior to the date of the change in consideration due under the lease. If not deemed appropriate, either party may choose not to apply this treatment, ensuring that no one will be left worse off by the change. The Government expect that the services, construction, manufacturing and agricultural sectors, in particular, will be positively affected by the changes.
The measure is important in assisting businesses that have been badly hit in their legitimate activity by the effects of the pandemic and in ensuring that they are not struck by unexpected tax charges. I therefore move that the clause stand part of the Bill.
Kemi Badenoch
Clause 23 makes changes to reduce the van benefit charge—the VBC—to zero for employees who are provided with a company van that produces zero carbon emissions. The van benefit charge applies where an employee is provided with a company van by their employer that they use privately, other than for ordinary home-to-work commuting.
At Budget 2014, the Government announced that the van benefit charge for zero-emission vans would be a percentage of the flat-rate van benefit charge for conventionally fuelled vehicles until April 2020. Those changes were legislated for in the Finance Act 2015. At Budget 2015, the Government announced that the planned increases to the percentages for 2016-17 and 2017-18 would be deferred to 2018-19, and the percentages would increase by 20% for each subsequent tax year, rising to 100% in 2021-22. Those changes were legislated for in the Finance Act 2016.
The changes made by clause 23 will reduce the van benefit charge to zero from 6 April 2021 for all company vans that emit zero carbon emissions, giving those vehicles preferential tax treatment over conventionally fuelled vehicles. The Government announced the measure at Budget 2020 to incentivise the uptake of zero-emission vans and to help the UK to meet its legally binding climate change targets.
Transport is now the largest sector for domestic UK greenhouse gas emissions, and a significant proportion of that is accounted for by road transport. Moreover, vans tend to do more mileage and are more polluting than cars. By reducing the level of the tax charge that would otherwise be applicable, the change outlined in the clause will incentivise the uptake of zero-emission vans and support the Government’s environmental commitments.
James Murray
As we have heard, clause 23 seeks to amend the law in relation to the van benefit charge, a taxable benefit that arises when an employee is provided with a company van that is also used at times for personal journeys. We know that from 2021-22 the cash equivalent of the van benefit charge for zero-emission vans is nil. This applies only to those vans that cannot emit carbon dioxide under any circumstances when being driven.
The Government announced their intention to introduce the policy change in the 2020 spring Budget. As the measure seeks to incentivise the uptake of zero-emission vans, we support it standing part of the Bill.
Question put and agreed to.
Clause 23 accordingly ordered to stand part of the Bill.
Clause 27
Optional remuneration arrangements: statutory parental bereavement pay
Question proposed, That the clause stand part of the Bill.
Finance (No.2) Bill (First sitting)
Debate between James Murray and Kemi Badenoch(3 years, 7 months ago)
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The Exchequer Secretary to the Treasury (Kemi Badenoch)
It is a pleasure to serve under your chairmanship, Sir Gary. The clause makes changes to ensure that decommissioning expenditure incurred by oil and gas companies in anticipation of the approval of an abandonment programme, a condition imposed by the Secretary of State or an agreement made with the Secretary of State qualifies for decommissioning tax relief.
Companies operating oilfields in the UK and the UK continental shelf have always been required to decommission the wells and infrastructure at the end of a field’s life. The tax relief for decommissioning expenditure is an important part of the UK’s overall oil and gas fiscal regime, which is balanced to maximise economic recovery of the nation’s national resources while ensuring that the nation receives a fair return for those natural resources. The changes made by the clause will clarify that appropriate expenditure on decommissioning incurred in anticipation of the approval of an abandonment programme, a condition imposed by the Secretary of State or an agreement made with the Secretary of State qualifies for decommissioning tax relief.
The clause does not have any Exchequer costs and does not alter the original policy intent of decommissioning tax relief. It will provide certainty for the UK oil and gas sector, which supports approximately 260,000 jobs, around 40% of which are in Scotland, and which has paid approximately £350 billion in production taxes to date. The clause will provide certainty that all appropriate decommissioning expenditure qualifies for decommissioning tax relief.
James Murray (Ealing North) (Lab/Co-op)
It is a pleasure to be back in Parliament physically and to lead on a Public Bill Committee for the first time under your chairmanship, Sir Gary.
James Murray
You will not be saying that by the end, Sir Gary.
We recognise that this clause makes a largely technical amendment to the Capital Allowances Act 2001, meaning that certain types of expenditure incurred by oil and gas companies on decommissioning plant and machinery before the formal approval of an abandonment programme will qualify for decommissioning expenditure relief. We will not oppose the clause. However, I want to ask the Minister about subsection (9), which introduces a clawback mechanism. It seems to apply when the anticipated abandonment programme has not been approved and the anticipated condition has not been imposed by the Secretary of State, or an anticipated approval has not been given by the Secretary of State within a specified period—namely, five years from the last day of the accounting period during which the expenditure was incurred.
In such cases, there is an obligation on the beneficiary of the relief to notify Her Majesty’s Revenue and Customs of the situation and to set out how any relevant returns are to be amended. Clearly, as with all tax reliefs, there is a risk that some companies might seek to exploit or use them inappropriately. I would therefore welcome the Exchequer Secretary setting out whether she thinks there is any potential risk of the relief being misused. If so, what actions will HMRC take to reduce the risk? What proactive investigations will HMRC make to verify that those taking advantage of the relief are doing so legitimately, and what penalties or other enforcement action will be taken if instances are uncovered where that is not the case?
Kemi Badenoch
I thank the hon. Gentleman for his questions. He raises an interesting point. We have been discussing industry’s concerns for some time over the lack of clarity on decommissioning expenses incurred prior to the approval of an abandonment programme. Industry already supports the measure. We consulted it on the draft legislation, and the clause takes account of comments received, particularly on the clawback mechanism that the hon. Gentleman refers to. We have now excluded the ongoing maintenance costs of assets waiting to be decommissioned from the clawback.
On clawbacks specifically, where expenditure is claimed on decommissioning in anticipation of an approval, the legislation allows five years for that approval to be in place before the clawback is triggered. We listened to industry’s comments during our consultation, and adjustments have been made to the clawback to exclude maintenance costs from the mechanism. The Department for Business, Energy and Industrial Strategy is responsible for overseeing decommissioning work on the UKCS. Where the anticipated approval condition or agreement is not approved by BEIS in the five-year period, it is appropriate for any relief to be clawed back. The legislation ensures that only legitimate decommissioning expenses qualify, and the clawback provides an important protection for the Exchequer.
Question put and agreed to.
Clause 16 accordingly ordered to stand part of the Bill.
Clause 17
Extensions of plant or machinery leases for reasons related to coronavirus
Question proposed, That the clause stand part of the Bill.
Jesse Norman
The clause makes provision for an easement for plant and machinery leases caught by anti-avoidance legislation when extended due to coronavirus. The easement has the effect of turning off the anti-avoidance legislation under specific circumstances. The reason for that is that HMRC has identified an issue where some plant or machinery leases could be adversely affected by the Government’s anti-avoidance legislation. This relates to specific circumstances where a lease is extended due to covid-19, and creates unexpected and unwelcome outcomes for many lessors and lessees. Therefore, at the Budget, the Government announced changes to ensure that the anti-avoidance mechanism is not unnecessarily triggered by legitimate commercial activity.
The measure will affect leases where a relevant change in consideration is implemented between 1 January 2020 and 30 June 2021. It is an easement, restoring eligibility to claim capital allowances to the position as originally intended immediately prior to the date of the change in consideration due under the lease. If not deemed appropriate, either party may choose not to apply this treatment, ensuring that no one will be left worse off by the change. The Government expect that the services, construction, manufacturing and agricultural sectors, in particular, will be positively affected by the changes.
The measure is important in assisting businesses that have been badly hit in their legitimate activity by the effects of the pandemic and in ensuring that they are not struck by unexpected tax charges. I therefore move that the clause stand part of the Bill.
Kemi Badenoch
Clause 23 makes changes to reduce the van benefit charge—the VBC—to zero for employees who are provided with a company van that produces zero carbon emissions. The van benefit charge applies where an employee is provided with a company van by their employer that they use privately, other than for ordinary home-to-work commuting.
At Budget 2014, the Government announced that the van benefit charge for zero-emission vans would be a percentage of the flat-rate van benefit charge for conventionally fuelled vehicles until April 2020. Those changes were legislated for in the Finance Act 2015. At Budget 2015, the Government announced that the planned increases to the percentages for 2016-17 and 2017-18 would be deferred to 2018-19, and the percentages would increase by 20% for each subsequent tax year, rising to 100% in 2021-22. Those changes were legislated for in the Finance Act 2016.
The changes made by clause 23 will reduce the van benefit charge to zero from 6 April 2021 for all company vans that emit zero carbon emissions, giving those vehicles preferential tax treatment over conventionally fuelled vehicles. The Government announced the measure at Budget 2020 to incentivise the uptake of zero-emission vans and to help the UK to meet its legally binding climate change targets.
Transport is now the largest sector for domestic UK greenhouse gas emissions, and a significant proportion of that is accounted for by road transport. Moreover, vans tend to do more mileage and are more polluting than cars. By reducing the level of the tax charge that would otherwise be applicable, the change outlined in the clause will incentivise the uptake of zero-emission vans and support the Government’s environmental commitments.
James Murray
As we have heard, clause 23 seeks to amend the law in relation to the van benefit charge, a taxable benefit that arises when an employee is provided with a company van that is also used at times for personal journeys. We know that from 2021-22 the cash equivalent of the van benefit charge for zero-emission vans is nil. This applies only to those vans that cannot emit carbon dioxide under any circumstances when being driven.
The Government announced their intention to introduce the policy change in the 2020 spring Budget. As the measure seeks to incentivise the uptake of zero-emission vans, we support it standing part of the Bill.
Question put and agreed to.
Clause 23 accordingly ordered to stand part of the Bill.
Clause 27
Optional remuneration arrangements: statutory parental bereavement pay
Question proposed, That the clause stand part of the Bill.
Covid-19: Disparate Impact
Debate between James Murray and Kemi Badenoch(4 years, 1 month ago)
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Kemi Badenoch
We have worked with the covid comms hub in the Cabinet Office and ministerial colleagues to build on the way public health messages are delivered effectively to ethnic minority people. In addition to the central marketing campaign, we have spent approximately £4 million to reach ethnic minority people through tailored messaging, strategically chosen channels and trusted voices. Additional funding and resources from the central campaign are also used to reach communities in specific regions, supporting local authorities to deliver bespoke translated material on request.
James Murray (Ealing North) (Lab/Co-op) [V]
On 3 May, Ranjith Chandrapala, a bus driver from Hanwell in my constituency, became one of the many BAME frontline workers to die of covid-19. Since then, I have asked the Chancellor and the Transport Secretary to extend the Government’s covid-19 life assurance scheme for families of health and care workers to others, including the families of bus drivers, such as Ranjith’s. Unfortunately, I have received only promises that support for key workers will continue to be reviewed. As the Minister mentioned that today’s report highlights a significant occupational exposure, will she commit to meet me and Ranjith’s family to discuss how we can ensure that this scheme is extended?
Kemi Badenoch
I thank the hon. Gentleman for his question and share the deep sympathy he has for the suffering of his constituents. All of us, across the House, are seeing this. I have had cases such as this in my constituency and they are devastating and heartbreaking. I know that many Members across the House have lots of suggestions for specific interventions we can make. I do not stand here just as an Equalities Minister and a Treasury Minister. We have said we are going to do whatever it takes, but we cannot do everything that everyone likes. If he would write to me on the issue—I have not had sight of this—perhaps I will be able to provide him with further information.