Customs Miscellaneous Non-Fiscal Provisions and Amendments etc. (EU Exit) Regulations 2020

Jesse Norman Excerpts

Thursday 21st January 2021 General Committees

[The Chair]

Before we begin, I remind Members about social distancing. There are clearly marked indications; where there is a tick, you can sit. On Mr Speaker’s advice, we must all wear masks in Committee when we are not speaking. Our Hansard colleagues would like any speeches to be sent to [e-mail].

[The Financial Secretary to the Treasury (Jesse Norman)]

I beg to move,

That the Committee has considered the Customs Miscellaneous Non-Fiscal Provisions and Amendments etc. (EU Exit) Regulations 2020 (S.I., 2020, No. 1624).

What an unexpected pleasure to see you in the Chair, Dr Huq. I welcome you to the Panel of Chairs. The instrument came into force at the end of the transition period and is subject to the urgent made affirmative procedure. The instrument has already taken effect, but still requires approval by both Houses.

Under the European Union withdrawal agreement and the Northern Ireland protocol, certain provisions of EU law continue to apply in Northern Ireland after the end of the transition period. In Great Britain, those provisions are modified to reflect the fact that the UK has left the EU. Previous amendments to the relevant legislation applied across the whole of the UK; however, further changes were needed to address the specific arrangements for Northern Ireland.

The instrument amends and modifies three areas of legislation. The first is legislation relating to customs safety and security procedures, including entry summary declarations and the registration of businesses for movements from Northern Ireland to Great Britain. The second is the application of the Customs and Excise Management Act 1979—CEMA—and the Finance Act 1994 to movements between Northern Ireland and Great Britain for non-duty purposes. Finally, the statutory instrument ensures that Her Majesty’s Revenue and Customs can continue to collect and process trade statistics data in the same way as before the United Kingdom left the EU.

Entry summary declarations contain safety and security information about the movement of goods. Declarations need to be submitted to HMRC, and are then risk-assessed before the goods arrive at the border. Those assessments are used in conjunction with intelligence-led targeting by Border Force in order to protect the security of the UK. The instrument removes the requirement for an entry summary declaration for the movement of qualifying Northern Ireland goods from Northern Ireland into Great Britain, in line with the UK’s wider commitments on unfettered access.

The instrument also retains the requirement of an entry summary declaration for the movement of non-qualifying Northern Ireland goods from Northern Ireland into Great Britain. Non-qualifying Northern Ireland goods include those that are not in free circulation in Northern Ireland, such as those subject to customs procedures—for example, inward processing—and goods that are in duty suspension or in an authorised temporary storage facility before they are moved to Great Britain. It also includes the trade of goods subject to specific obligations binding on the United Kingdom and the EU, such as those on endangered species or conflict diamonds.

Those changes are necessary in order to allow safety and security declaration requirements to be maintained for non-qualifying Northern Ireland goods that move into Great Britain from Northern Ireland, while simultaneously allowing appropriate Northern Ireland traders to maintain unfettered access to the rest of the United Kingdom market. Anti-avoidance measures are also in place to deter businesses from re-routing goods via Northern Ireland, if they do so in order to avoid United Kingdom duty or import formalities.

In addition, the legislation states that for goods arriving by sea from Ireland, the Channel Islands or other nearby ports, where an entry summary declaration is required, that declaration must be submitted two hours before the vessel arrives at a port in Great Britain. Without that amendment, earlier submission would be required, which would be impractical given the relatively short duration of crossings. It also aligns the declaration time limits to those already in place for the same sea movements in the opposite direction.

Moreover, the instrument requires economic operators to obtain a UK economic operation registration and identification number, otherwise known as a UK EORI number, to move non-qualifying Northern Ireland goods from Northern Ireland into Great Britain. An economic operator is a person who, through the course of their business, is involved in customs activity covered by customs legislation. It is necessary for those operators to have a UK EORI number starting with GB in order to make declarations or to get a customs decision in Great Britain. Registration is via a quick and simple process, and an EORI number will usually be issued straight away. This instrument also ensures that penalties apply to failures to comply with the requirements to submit an entry summary declaration, including the need to be registered for a UK EORI number.

I turn now to the second area of legislation covered by this statutory instrument, which is the regulations relating to the Customs and Excise Management Act 1979, otherwise known as CEMA, and the Finance Act 1994. CEMA is the principal Act covering enforcement provisions relating to customs.

First, CEMA provisions that relate to movements between the Republic of Ireland and Northern Ireland are revoked by this statutory instrument. That is because CEMA has already been amended to reflect the Taxation (Cross-border Trade) Act 2018, whereas EU rules concerning the movement of goods continue to apply to those movements under the Northern Ireland protocol.

Secondly, this instrument allows CEMA enforcement powers—for example, the ability to seize and detain goods—to be used for the purpose of enforcing prohibitions and restrictions on the movement of goods, people and vehicles, between Great Britain and Northern Ireland, where there is no connection to customs duty.

This instrument also ensures that the enforcement provisions at chapter III, part 1 of the Finance Act 1994 can be used in relation to the export of restricted or prohibited goods, as appropriate. Those include HMRC’s powers to require the production of documents, or to remove documents, or enter premises. That applies in Northern Ireland for the movement of goods from Northern Ireland to Great Britain.

Finally, I turn to the area of trade statistics. This statutory instrument makes minor amendments to the law on statistical data collected on the trade of goods between the United Kingdom and members of the EU, in order to take account of the Northern Ireland protocol. That is important in order to meet international reporting requirements. The instrument ensures that the legislation works properly, both in Northern Ireland, where EU statistical rules will continue to apply as a result of the Northern Ireland protocol, and in Great Britain, where they will not. As a result, HMRC will be able to continue to collect and process trade statistics in the same way as before the United Kingdom left the EU.

These are technical but important customs regulations. They help to ensure that goods can continue to move smoothly and safely between Northern Ireland and Great Britain and that matters related to those movements can continue as anticipated. I hope that colleagues will join me in supporting the customs regulations, and I commend them to the Committee.

--- Later in debate ---

[Jesse Norman]

I thank the hon. Member for Houghton and Sunderland South for her comments and also for her party’s support for this important legislation. She asked a question about the Joint Committee. As she will be aware, the present statutory instrument relates to trade between Northern Ireland and Great Britain, which is a UK matter, but general relationships as regards the Northern Ireland protocol and the relationships with the EU in relation to that, are being handled by the Joint Committee, and I would expect them to continue to be handled in that way, and appropriately so—it seems that that mechanism is working well.

The hon. Member asked a question about, as it were, the level of regulation being applied to movements across the border. I can remind her—she knows—that the Government made a commitment to unfettered access, and unfettered access for qualifying goods, as discussed, is what we have. There are, of course, non-qualifying goods and goods in duty suspension, and it has always been understood that goods for which duty has not yet been collected are ones that will need to be covered. And of course there are other things—conflict diamonds and the rest—which are governed by international agreements that already exist and which are being honoured.

The hon. Member described the situation as regards Great Britain-Northern Ireland trade as “shambolic”. I do not think that is true at all. The picture so far, in these relatively early days, has been actually rather good. Goods are continuing to move effectively between Great Britain and Northern Ireland. There are no significant queues at Northern Irish ports, and individual issues are being quickly addressed by UK authorities. The freight levels that are going into and out of Northern Ireland ports are good and are close to or at the normal levels pre-Christmas, and volumes remain significantly higher than on GB-Ireland routes. The grace periods for businesses that are operating are working well. And Northern Ireland retailers report broadly adequate stock levels.

The hon. Member mentioned the Trader Support Service. Of course concerns that she has and she raises here will be carefully attended to by HMRC and she is right to put those concerns on the public record. I will say to her that the Trader Support Service now has 28,000 businesses signed up. Of course, it largely handles trade going into Northern Ireland, which is outside the purview of this statutory instrument, but I can inform her that since 1 January more than 99% of Trader Support Service-processed declarations have been completed within 15 minutes. The vast majority of calls are answered within 30 seconds. And the service has directly supported more than 12,000 consignments. I do not think that is consistent with the picture that she paints. Of course, it is an evolving and dynamic situation, but I think we can say that so far the arrangements put in place have been effective and are working fairly well. With that, I commend the statutory instrument to the Committee.

Question put and agreed to.

Second-hand Margin Scheme in Northern Ireland: Motor Vehicles Sourced from Great Britain

Jesse Norman Excerpts

Thursday 14th January 2021 Written Statements

[The Financial Secretary to the Treasury (Jesse Norman)]

My noble Friend the Minister of State (Lord Agnew of Oulton) has today made the following written ministerial statement.

Under the Northern Ireland protocol (“the protocol”), EU VAT rules in respect of goods will continue to apply in Northern Ireland. However, Northern Ireland is, and will remain, part of the UK’s VAT system.

As set out in the 10 December 2020 Command Paper [CP 346] , the Government are aware of concerns regarding the use of the second-hand margin scheme in Northern Ireland, with respect to motor vehicles sourced in Great Britain. The Government understand the impact this may have on Northern Ireland traders and consumers, and are therefore exploring options to minimise this.

As an interim measure, the Government will be issuing guidance to traders on how they can continue to apply the margin scheme in relation to motor vehicles sold since the end of the transition period.

Following initial engagement this week, the Government will also seek to agree a long-term derogation with the European Commission from EU VAT rules to allow the margin scheme in Northern Ireland to apply in respect of motor vehicles sourced in Great Britain.

In line with this approach, the Government will bring forward legislation at the earliest opportunity on the use of the margin scheme in Northern Ireland with respect to motor vehicles sourced in Great Britain. Consistent with the Government’s intentions to apply for a derogation, this legislation will be retrospective and apply from 11pm on 31 December 2020.

[HCWS710]

Draft Tax Credits Reviews and Appeals (Amendment) Order 2020

Jesse Norman Excerpts

Monday 11th January 2021 General Committees

[The Chair]

Before we begin, I thank Members for observing social distancing and sitting only in the places that are marked. Hansard colleagues would be most grateful if Members sent their speaking notes to [e-mail].

[The Financial Secretary to the Treasury (Jesse Norman)]

I beg to move,

That the Committee has considered the draft Tax Credits Review and Appeals (Amendment) Order 2020.

The order was laid before the House on 15 October. The Government are committed to a welfare system that ensures that work pays and is fair to the taxpayer, and to a system that protects the most vulnerable people in our society. This legislation allows the Government to review tax credit awards and, where appropriate, apply disability elements in retrospect. The legislative change that we are making allows tax credit disability elements to be fully backdated, and provides equal outcomes for former and existing claimaints with a disability, or who have a child with a disability.

I will first outline the background to this issue. Tax credit claimants with a disability, or who have a child with a disability, and who receive qualifying disability benefits, such as disability living allowance or the personal independence payment, are entitled to corresponding tax credit disability elements in their award. For 2020-21, the disabled worker element is set at £3,220 per year, with a severe disability element of £1,390 paid to qualifying claimants in addition to this. The disabled child element is set at £3,415 for each child with a disability, with an additional £1,385 available for each child with a severe disability.

Under existing legislation, Her Majesty’s Revenue and Customs does not in all cases have the power to review these elements if it has made a final decision on a claimant’s tax credit entitlement for the tax year. A final decision is typically made when a claimant ends their tax credit claim and moves to universal credit, or when someone renews their claim at the end of the tax year. This legislation will allow HMRC to review tax credit awards after it has made a final decision, and to determine if disability elements are due.

As for how the legislation will be applied, as long as a claimant reports the award of a qualifying disability benefit within one month of the award decision date, HMRC will determine whether the claimant would have been entitled to tax credit disability elements. Claimants will then be paid tax credit disability elements, irrespective of the length of time it takes for the qualifying disability benefit claim to be determined, and of whether they have a continuing tax credit award. This legislative change extends to current and former tax credit claimants, and it applies to claimants who report the award of a qualifying disability benefit once the legislation is in force.

HMRC commissioners have agreed to use their discretionary payment and management powers to review final decisions and pay claimants who provide notification, within the statutory time limit, of the award of a qualifying disability benefit on or after 6 April 2020, and in anticipation of the order coming into force. HMRC estimates that as a result of this legislation, up to 300 claimants a year are likely to gain tax credit disability elements on which they would otherwise have missed out.

It is particularly important that the Government make this change as tax credits come to a close, and as increasing numbers of people move on to universal credit. Some may subsequently receive a decision on a disability benefit claim made before they moved to universal credit, so in order to ensure that claimants receive their entitlement, this measure will be in place until the closure of the tax credits regime. The instrument also increases the time allowed for reviews of tax credit entitlement decisions where these circumstances apply.

The changes I have outlined will support people with disabilities, and will further improve the efficiency of the welfare system. I hope Members will join me in supporting this legislation.

--- Later in debate ---

[Jesse Norman]

I thank the hon. Lady for her questions. She is right to focus on the point about minor errors; they do occur in drafting legislation. One of the tasks of a Minister in my position is to take through the House, from time to time, legislative corrections to the drafting errors that occur despite very careful scrutiny by officials, tax experts, the legislative drafting experts—parliamentary counsel—and the rest. It is certainly an ambition of the Government to keep these to an absolute minimum—or, in a perfect world, to eliminate them altogether.

The hon. Lady’s questions on proposed new section 21C are sufficiently detailed for me to think that the correct approach will be to write to her separately with the detailed responses that she is seeking. From an HMRC and Government standpoint, we are extremely careful about the issue of the application of powers in general. She will be aware that we have done considerable work on safeguards to ensure that the application and creation of powers is measured, and is done in a way that properly respects the concerns of this House. We are regularly chastised by parliamentary Committees, notably the Lords Economic Affairs Committee, when they judge that the Government are pushing too far on the creation of powers, or that HMRC is pushing too far on their application, so it is right to raise that question. There are established procedures for properly assessing and calibrating those powers; there is internal sign-off and potential review by the commissioners, and ultimately, of course, parliamentary procedures by which these issues can be referred to Ministers. With that in mind, I ask Members to support the legislation.

Question put and agreed to.

Follower Notices and Penalties

Jesse Norman Excerpts

Wednesday 16th December 2020 Written Statements

[The Financial Secretary to the Treasury (Jesse Norman)]

The Government introduced the follower notice regime in Finance Act 2014, following a consultation titled “Raising the Stakes on Tax Avoidance”. The Government consider that the follower notice regime is an important element in the legal framework available to HMRC to tackle tax avoidance.

In December 2018 the House of Lords Economic Affairs Committee published its report “The Powers of HMRC: Treating Taxpayers Fairly”. In that report, the Committee recommended that the penalties associated with follower notices be abolished. The Government rejected the recommendation to abolish follower notice penalties as this would render the regime ineffective. However, I said in testimony to the Committee that HMRC would examine the possibility of providing greater judicial oversight of the follower notice safeguards.

The Government understand the concerns that have been raised about follower notices, but it has not been possible to identify any effective means of providing greater judicial oversight of the follower notice regime which would not re-introduce, or even worsen, the delays in settlement and payment of disputed tax which the regime was designed to address. However, the Government have also taken the opportunity to look closely at other options to ensure the follower notice regime can best achieve its objectives. They accept that a better balance can be found between encouraging taxpayers who have used tax avoidance schemes which have been defeated in the courts, to reach agreement with HMRC; and allowing those who genuinely believe their case is different from that heard by the courts, to continue their dispute. This can best be achieved with a stronger focus on those whose continuation of their dispute, even once they have received a follower notice, is without merit.

Therefore, I am announcing publication today of a consultation document “Follower Notices and Penalties”. This consultation proposes to reduce the level of penalty for a taxpayer not acting in response to a follower notice from 50% of the disputed tax to 30%. A further penalty of 20% would be chargeable only in cases where those receiving follower notices continue their disputes to litigation, and the tax tribunal rules that it was not reasonable for them to have done so.

The Government are committed to tackling all aspects of the avoidance market, including those who promote tax avoidance schemes. The Government announced measures in July and November aimed at strengthening HMRC’s ability to tackle those who sell avoidance schemes.



The consultation has been published here:

https://www.gov.uk/government/consultations/follower-notices-and-penalties. It will run to Wednesday 27 January.

[HCWS661]

National Insurance Contributions Re-rating 2021-22

Jesse Norman Excerpts

Wednesday 16th December 2020 Written Statements

[The Financial Secretary to the Treasury (Jesse Norman)]

In line with the approach set out in the spending review document on 25 November (CP 330), the Government will use the September consumer prices index (CPI) figure (0.5%) as the basis for setting all national insurance limits and thresholds, and the rates of class 2 and class 3 national insurance contributions, for 2021-22. A table of these 2021-22 national insurance rates and thresholds will be placed in the Library of both Houses.

[HCWS657]

Taxation (Post-transition Period) Bill

Jesse Norman Excerpts

3rd reading & 3rd reading: House of Commons
Tuesday 15th December 2020 Commons Chamber

[Matt Western]

Our biggest and nearest customer is the EU. It is a critical customer and supplier to so many businesses in the UK, particularly in our manufacturing sector.

Let me briefly turn to the Northern Ireland protocol. We were told that there would be no checks, but as of last week, we have seen the need to implement new checks and controls for goods moving from Great Britain to Northern Ireland and, to a lesser extent, from Northern Ireland to Great Britain. The Government have said rather vaguely that a significant majority of internal UK trade will be tariff-free. I would be interested to know what assessment the Government have made of the precise percentage of GB-Northern Ireland trade that will be and the volume and value that will be subject to tariffs.

That is why these amendments are important. They are aimed at injecting urgency, with just 16 days until the transition period ends. Businesses want clarity and certainty, and they need it urgently. The intention of new clause 3 and amendments 1 and 2 is simply to demand that the Government make clear when they will propose the secondary legislation flowing from the Bill, to help those businesses. The Food and Drink Federation has said that the guidance is being published too late, and 43% of its members that supply Northern Ireland have said that they will not be able to do so in the first three months of next year. Our amendments are very similar to those proposed and, sadly, voted down in Committee. They are vital to assist our businesses and are business-friendly, as the Opposition are.

I cite the disruption that we are in danger of allowing. We have seen what happened with Honda—one of the most efficient companies on the planet. That should be the canary in the mine. If Honda is not able to get parts from its supply chain here to the UK, what hope is there for small and medium-sized businesses across the UK? Whether they are a clothes retailer or a car manufacturer, they just want clarity and certainty. They want an uninterrupted supply of goods into the first quarter of next year. Given the damage already done by the pandemic, we cannot afford further economic disruption. The Government need to move swiftly. That is why new clause 3 and amendments 1 and 2 are so important, and that is why I am supporting them.

[The Financial Secretary to the Treasury (Jesse Norman)]

I am grateful to everyone who has contributed to the debate. I will address the proposed amendments and then come to the specific points that have been raised.

New clauses 1 and 2, tabled by my hon. Friend the Member for Stone (Sir William Cash), would, if adopted, mean that the provisions in the Bill would apply notwithstanding any domestic or international law. The House will be aware that on 17 September, the Government set out that Parliament would be asked to support the use of so-called “notwithstanding” provisions in clauses 44, 45 and 47 of the United Kingdom Internal Market Bill and any similar subsequent provisions in a Finance Bill, but only in circumstances where the fundamental purposes of the Northern Ireland protocol would be undermined. Only in those circumstances would Parliament be asked to support the use of so-called “notwithstanding” provisions, as described.

[Sir William Cash]

We do not really know exactly how the Northern Ireland protocol is going to be interpreted, nor do we actually know its full content, and the Chancellor of the Duchy of Lancaster is declining to appear before my Committee to explain it.

[Jesse Norman]

What we do know is that the agreement was reached by the Chancellor of the Duchy of Lancaster acting for the Government on a duly legitimately and democratically elected basis in the exercise of our national sovereignty, and that should, I think, be enough for my hon. Friend.

These clauses were previously introduced as reasonable steps to create a safety net so that the Government would always be able to discharge their commitments to the people of Northern Ireland in the event that a negotiated outcome could not be reached in the Joint Committee. Following intensive and constructive work over the past weeks by the UK and the EU, the Government have now reached an agreement in principle on all issues in relation to the protocol on Ireland and Northern Ireland. This is an agreement that discharges the Government’s commitment to the people of Northern Ireland to ensure that there are no tariffs on goods remaining within the UK customs territory.

As part of the agreement, the Government committed to removing the notwithstanding provisions in the United Kingdom Internal Market Bill and not to introduce them or any similar provisions in this Bill. As was noted by the Chancellor of the Duchy of Lancaster in his statement to the House last week, in view of the agreement these provisions are no longer required. On that basis, I hope the House can agree that new clauses 1 and 2 are unnecessary.

New clause 3 and amendments 1 and 2 tabled by the Opposition would, if adopted, require the Treasury to publish guidance setting out its proposed approach to any reliefs, repayments and remissions for which the Bill allows provision to be made. The provisions contained within the Bill ensure that the Government have the flexibility they need to establish the framework for such reliefs, repayments and remissions. Details of any policies along these lines would be announced in due course, and HMRC will publish detailed guidance providing certainty to traders and businesses, as is its normal procedure. For this reason, putting such additional provisions in the Bill is unnecessary, and therefore I urge the House to resist these amendments.

New clause 3 would, if adopted, require the publication of various reports setting out the timeframes in which the customs duty charges contained in clauses 1 and 2 would be implemented as well as the factors taken into account when using these powers. The provisions contained in clauses 1 and 2 allow the Government to establish customs charging provisions to support the practical application of article 5.1 and 5.3 of the protocol and to deal with the movement of goods from Northern Ireland to Great Britain. This is important legislation, which will ensure that the Government are able to implement the Northern Ireland protocol as required in UK law ahead of the end of the transition period. The regulations that set out the detail of the charging regimes will be laid after the Bill receives Royal Assent.

This Bill thus provides the framework, and the detail will be provided alongside the relevant regulations. When bringing forward regulations the Government will also provide explanatory material in the usual way.

If I may, I will now turn to some of the questions raised by Members who spoke in the debate. The right hon. Member for Wolverhampton South East (Mr McFadden) encouraged the Government to get a move on; as he will know, the Government have been proceeding extremely rapidly and energetically in this area ever since the issues first arose. He also asked about guidance, and of course he is right that in the normal course of these things guidance will follow the publication of the Bill, but he also ought to be aware that the guidance that will be published follows the Northern Ireland protocol and the Command Paper and that in relation to other matters, which is what I was referring to, the House has seen customs guidance on 7 August, the trader support service launched on 20 September, guidance on VAT and excise on 26 October, and a whole host of other information designed to support traders and others involved in these changes.

The right hon. Gentleman asked what new systems are being put in place, as did my right hon. Friend the Member for Wokingham (John Redwood), so let me respond on that. My right hon. Friend will be aware that, in terms of the agreement for at-risk and not-at-risk goods, there is a requirement for there to be genuine and substantial use for the goods to be classified as at-risk. HMRC expects there to be up to 11 million declarations in relation to trade between Great Britain and Northern Ireland, and the Customs Declaration Service, which has been put in place, has a minimum viable product up and running as we speak.

The hon. Member for Glasgow Central (Alison Thewliss) referred to hokey-cokey clauses, but of course the clauses have never been included. They were themselves a response to a perfectly plain concern, which every Member of the House should feel, that, as matters stood, even a bag of salad would be considered an at-risk good, a consequence of the previous understanding that was patently absurd and which has been removed by this change.

The hon. Member for Warwick and Leamington (Matt Western) talked about a last-minute approach, but I would remind him that when this point, or this attempted point, was made by the shadow Chief Secretary, the hon. Member for Houghton and Sunderland South (Bridget Phillipson), I asked her if she could recall a single occasion when the EU had ever failed to negotiate except at the very last minute of a negotiation, and she was unable to point to such a case. That is, I think, the principal reason why we are in the position that we are in.

With those remarks, I would urge the House to resist these amendments.

[Sir William Cash]

We have had an interesting debate and, as far as I am concerned, the Government had originally proposed putting these clauses in the Bill itself. I personally think that they will find, in due course, a necessity to have something that is on exactly the same lines, and the same applies to the UKIM Bill. However, in the circumstances, because I want this Bill to go through, I beg to ask leave to withdraw my new clause. I just simply say: sovereignty is indivisible.

Clause, by leave, withdrawn.

New Clause 3

Treasury use of powers

“(1) The Treasury must, within four working days of the day on which this Act is passed, publish a report setting out the timeframe within which it will use the powers to make regulations conferred by—

(a) section 40A(2) of TCTA 2018;

(b) section 40B(1) and (2) of TCTA 2018;

(c) section 30A(4) of TCTA 2018;

(d) section 30B(1) and (3) of TCTA 2018;

(e) section 30C(5) of TCTA 2018; and

(f) section 5(2) of this Act.

(2) The Treasury must publish an annual report setting out how it has made use of the powers referred to in subsection (1).

(3) Each report under subsection (2) must include an assessment of—

(a) what considerations the Treasury made when deciding to use its powers, and

(b) the impact of the regulations on individuals and businesses throughout the UK, and specifically in Northern Ireland.”—(Mr McFadden.)

Brought up, and read the First time.

Question put, That the clause be read a Second time.

--- Later in debate ---

[Jesse Norman]

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

We have had some good debates in the course of the Bill. I thank right hon. and hon. Members for their contributions, but there are two in particular whom I would like to thank. First, the right hon. Member for Wolverhampton South East (Mr McFadden) has truly been the workhorse of the shadow Front Bench throughout the Bill. For a shadow Economic Secretary, as he is supposedly designated—he should of course be much higher—he has done a wonderful job, and I salute him for it. Secondly, I thank my hon. Friend the Member for Stone (Sir William Cash), who is sadly no longer in his place. I think he should be referred to as the ancient mariner of Brexit. As you may recall, Mr Deputy Speaker, Coleridge says:

“It is an ancient Mariner,

And he stoppeth one of three.

‘By thy long grey beard and glittering eye,

Now wherefore stopp’st thou me?”

Although my hon. Friend does not, tragically, present us with a long grey beard, he has something of a glittering eye where matters of Brexit are concerned. We can only salute the energy and indefatigability with which he has attacked the topic over many years, while perhaps devoutly hoping that this may be the moment at which, at the end of this year, a hiatus or pause may be reached.

In just over two weeks’ time, the transition period will end. The UK and its tax system must be ready to support the smooth continuation of business across this country. In that regard, the Bill is a cornerstone of those preparations. In addition, it will play an important part in helping to implement the Northern Ireland protocol and to safeguard the Belfast/Good Friday agreement. It introduces a framework for charges on goods arriving in Northern Ireland and enables the Government to put in place decisions made by the Joint Committee for goods deemed to be at risk of moving into the EU. It also includes mechanisms to ensure that, in so far as is possible, VAT will be accounted for in the same way as it is today in Northern Ireland.

Let me once again assure the House that HMRC will remain the tax authority for the whole of the UK, and let me remind hon. and right hon. Members that businesses will continue to submit only one UK VAT return to account for VAT on all supplies of goods and services. The Bill also amends current legislation for excise duty to be charged when excise goods are removed to Northern Ireland from Great Britain, as required by the protocol. However, that does not mean additional costs for Northern Ireland businesses and consumers, because the Government will be introducing a mechanism to offset any excise duty already paid on those goods in Great Britain.

The Bill introduces a small increase in the rate of duty on aviation gasoline, which will apply across the UK to ensure consistency between Great Britain and Northern Ireland. Finally, the Bill includes a small number of other taxation measures, including measures to ensure the Government retain their ability to prevent insurance premium tax evasion.

[John Redwood]

I think the Minister needs to be a little more forthcoming. What is the EU’s enforcement mechanism if it thinks UK authorities have not fulfilled the remit? What percentage of trade are we expecting to be caught up in this double jurisdiction?

[Jesse Norman]

As I have already said to my right hon. Friend, without venturing a percentage, the test for at-risk goods is those where there is a “genuine and substantial risk”, and therefore those are expected to be a smaller proportion of goods, but trade of course is a flexible and ever-changing thing, so whatever numbers there are may change over time.

My right hon. Friend also asked a question about the EU. I am not going to speculate on what the EU does, but I can assure him that there will be no EU customs, embassy or the like and no joint control over customs in Northern Ireland. HMRC will remain the tax authority for Northern Ireland, as it is for the whole of the UK.

The Bill also includes new powers that will enable HMRC to raise tax charges under the controlled foreign companies legislation for the period 2013 to 2018. Lastly, to help level the playing field for UK businesses, the Bill also moves VAT collection on certain imported goods away from the border and removes VAT relief on low-value consignments to clamp down on VAT abuse and to protect our high streets.

The Bill gives businesses throughout the UK certainty about the arrangements that will apply from 1 January of next year. Above all, it helps the Government to safeguard what we all prize and desire, or should all prize and desire: the unity and integrity of the United Kingdom. I commend the Bill to the House.

--- Later in debate ---

[Alison Thewliss]

I also wish to thank the Minister and the Opposition Front-Bench spokesperson, the right hon. Member for Wolverhampton South East (Mr McFadden), for the way in which this debate has been conducted, as well as the hon. Member for Stone (Sir William Cash) for his contributions, which were typically detailed. There is one point of detail that I was quite surprised that he missed. I have been saving this up the end, just in the hope that he might have picked up on it. He has waxed lyrical about sovereignty, as he does in every single debate I think he has ever spoken in, but I am quite surprised that he allowed to fly the EU setting the level of taxation on aviation gasoline. The reason that I am quite surprised about that, in the most ludicrous of ludicrous Brexit-based patriotic ironies, is that avgas is the fuel used not just in private and leisure aircraft, as the Minister set out, but in Spitfires, Hurricanes and other similar planes. There is some mad irony in the UK Government handing over to the EU the power to set the taxation on those vintage planes that bear so much patriotism among so many people.

I suppose that it is typical of the Government’s approach to all of this that there is so much detail in the Bill that we cannot possibly see—

[Jesse Norman]

Will the hon. Lady give way?

[Alison Thewliss]

Of course.

[Jesse Norman]

Will the hon. Lady tell us how much extra cost filling a Spitfire with fuel will incur according to this extra avgas taxation?

[Alison Thewliss]

I think the Minister knows well that it is the principle of the EU continuing to set the fuel duty rate, rather than the cost of it. Conservative Members know well about all these principles—they are principles of patriotism that they hold dear. The Minister has allowed this to slide in and he has done very well not to alert their suspicions on it.

[Jesse Norman]

I think we can all have a patriotism that is rich and bold enough to incur an extra £10 on a 450-litre tank of avgas.

[Alison Thewliss]

I thank the Minister for that detail. If he can tell me the further details on the questions that I have not yet had answered from the previous day’s debate, that would be welcome. I can go through the things that he has not yet answered and have him answer all those, if he has that particular detail to hand. I thank him for that and look forward to letters appearing in my letterbox with the detail at some stage.

Other letters that have not yet appeared are those from Baroness Davidson and the former Secretary of State for Scotland, who both threatened to resign if Northern Ireland got any special treatment in these negotiations, yet that is exactly what we have as a result of this legislation. As the Chancellor of the Duchy of Lancaster said, it gets the “best of both worlds” in this deal—it gets to be in the EU and part of this Union—and yet Scotland is not getting any of that. Scotland is getting thoroughly ripped off as a result of the deal.

The Minister talked about strengthening the Union, but the Union is slipping away from the Government’s grasp. By every action that they take in this legislation, Scotland sees further and further how we are being undermined and left behind by this Government. They do not give much of a toss about Scotland—they are pushing their own Brexit agenda, and the rest of us can put up with it.

The Minister mentioned the additional paperwork that is coming. Northern Ireland in particular is being wound up in a giant Christmas ball of red tape as a result of the legislation. He talked about 11 million extra declarations and paperwork. That is more than 265 additional bits of form-filling that will happen after Brexit. The Government used to talk about getting rid of all the red tape, but in fact they are increasing it. They used to talk about taking powers back from the bureaucrats in Brussels, whereas in fact they are giving them back to bureaucrats in Whitehall, out of sight of this House.

We still do not know whether the transition period is ending, and with 16 days to go we still do not know what we are going to transition to. This Government have made an absolute mess of the four and a half years that they have had. We have absolutely no confidence in the direction that they are going and, with 16 polls in Scotland now showing support for independence consistently over the past months, we can see exactly where Scotland is going. It should be going there as soon as possible.

Draft Customs Safety and Security Procedures (EU Exit) Regulations 2020

Jesse Norman Excerpts

Thursday 10th December 2020 General Committees

[The Chair]

Before we begin, I remind Members to observe social distancing. You are all sitting in places that are marked, so I thank you for that. Hansard colleagues would be grateful if Members sent their speaking notes to [e-mail]. I ask you to observe social distancing particularly when you are leaving. Thank you.

[The Financial Secretary to the Treasury (Jesse Norman)]

I beg to move,

That the Committee has considered the draft Customs Safety and Security Procedures (EU Exit) Regulations 2020.

It is a delight to see you in the Chair, Ms Nokes, and to serve under you.

As the Committee will be aware, this statutory instrument is technical and will give the Government a tool they may need to alleviate any disruption at the border that arises after the end of the transition period. The instrument must be understood in the context of the current regime for managing the safety and security risk of goods entering and leaving the United Kingdom. The UK is guided in this regard by the World Customs Organisation’s SAFE framework of standards to mitigate risks associated with the import and export of goods. SAFE stipulates that before goods arrive in or depart from a territory, data must be collected and risk assessed by customs authorities. This data is submitted in the form of entry and pre-departure declarations. These declarations are currently managed through the Union customs code, retained in UK law after the end of the transition period by the European Union (Withdrawal) Act 2018.

While we have been part of the EU’s safety and security zone, these declarations have been required only when goods are moving into or out of the EU. When the transition period ends on 31 December 2020 goods moved between Great Britain and the EU as well as the rest of the world will require these declarations. As part of the staging in of customs controls, the Government have waived for six months the requirement for the submission of an entry summary declaration for movements into Great Britain from the EU or another territory where such a declaration is not currently required.

Before goods are moved out of the country, carriers are obliged to submit safety and security information to Her Majesty’s Revenue and Customs for risk assessment. As well as managing risks that involve the movement of weapons and illicit goods, the information is used to regulate other international obligations, such as the rules governing the movement of live animals. The information is normally contained in a customs export declaration. In cases where a fiscal declaration is not required, such as businesses repositioning empty trucks or packaging, a stand-alone exit summary declaration is required.

The SI will give HMRC commissioners the ability during the six months of the staging-in period to publish public notices waiving the requirement for safety and security declarations for goods exported from Great Britain. A public notice could also be used to alter the pre-departure timing requirement for the submission of declarations. The powers can be used only to alleviate border disruption that may arise, and only during the staging-in period. The powers can be deployed in a targeted way: for example, the Government could use them to waive the safety and security export declaration requirement for a specific sector, or a port, or for a given time period. The powers would be used only where it was necessary to ensure the smooth flow of goods across the border. The Government would consider the balance of risks of border security with the impact on border flow before introducing a waiver. The Government will update Parliament as appropriate when making use of the powers, if any are in fact used.

The Northern Ireland protocol means that there are no safety and security requirements for goods moved between Northern Ireland and the EU. Under the protocol, EU UCC—Union customs code—rules will apply in Northern Ireland. The public notice powers provided by this instrument would not affect safety and security requirements for goods exported from Northern Ireland. The movement of goods between Northern Ireland and the rest of the world will be subject to safety and security requirements.

As I have said, the Government would use these powers only where absolutely necessary to preserve the smooth flow of goods at the border and after due consideration of any risks arising from their use. The powers, which are time limited and can be deployed in a targeted fashion, will help to give the Government the appropriate ability to respond to manage disruption at the border if that should arise at the end of the transition period. I commend the regulations to the Committee.

--- Later in debate ---

[Jesse Norman]

I thank the Opposition spokesmen for their comments. The right hon. Member for Wolverhampton South East says this is not technical. Of course, by “technical” I do not mean that the law may not have some impact. Of course, this is a power that we do not anticipate necessarily having to use; it is a tool that the Government think is advisable to be used in some very constrained and particular circumstances in the event of unanticipated disruption. We are going through a major change in our trading arrangements. It is sensible to make contingency arrangements.

The right hon. Gentleman may have forgotten that when it comes to safety and security declarations, data is not gathered by the UK in regard to trade with the EU, because we have been part of the EU internal customs and internal market. From that point of view, nothing changes. He and others have asked whether there will be some great compromise to security. We do not anticipate a great compromise to security.

[Mr McFadden]

The Minister has just said that nothing changes in terms of relations with the EU because we are part of the single market. From 1 January, we will not be part of the single market so quite a lot changes.

[Jesse Norman]

No, what I have said is that, since we do not gather data at the moment, what we are doing is continuing a system that already exists for a period of time—or we would be if we put in place these powers—and that does not represent a change from what we do at the moment as we do not gather the data at present. As I have already said, our trading arrangements of course do significantly change.

The right hon. Gentleman asked about the Home Office, and I can reassure him that of course these measures are developed in consultation and consideration and discussion with the Home Office. The SNP spokesman, the hon. Member for Paisley and Renfrewshire North, seemed to be having a few operational issues with his own handwriting—I am not quite sure if that is true—so he is well placed to speak on operational issues. Let me just say one thing: as far as I can tell, the numbers that he quoted were from external organisations, the NAO and so on. It is for them to comment on whether the numbers they come up with should be updated. From the Government’s standpoint, the numbers are as they have been published. With that in mind, I invite the Committee to support the motion.

[Mr McFadden]

The Minister has not answered a couple of questions that I asked. One was whether he can guarantee that there will not be an extension of these provisions beyond the first six months of next year, and the other was the question of weapons that he mentioned in his opening remarks. Can he explain exactly how these regulations will affect the export of weapons?

[Jesse Norman]

Sure. What I was saying, as the right hon. Gentleman will recall, as regards duration is that they last for six months. Of course, to seek a guarantee in such circumstances is a classic political request. No guarantees can be given, but we certainly do not anticipate extending the regulations. They are specifically designed to be a contingency tool to be used in specific circumstances, for specific purposes, and for a time-limited period.

In relation to weapons, all I said was that the existing arrangements had in part the goal of monitoring the transfer of weapons. As I have said, data gathering does not at present exist on the safety and security declarations, and that will not change as a matter of fact for a period of time, but of course Border Force and other agencies that are concerned with the flow of goods across the border continue to be engaged, and from that perspective we think that the border remains well defended and well supported. Of course, we have made significant infrastructure investments in order to make sure that that is the case.

Question put and agreed to.

11.50 am

Committee rose.

Taxation (Post-transition Period) Bill

Jesse Norman Excerpts

2nd reading & 2nd reading: House of Commons
Wednesday 9th December 2020 Commons Chamber

[The Financial Secretary to the Treasury (Jesse Norman)]

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

It is a delight to speak under your chairmanship, Madam Deputy Speaker.

In three weeks’ time, the transition period will end and this country will take its place as a fully sovereign trading nation once more. It is a very important moment in our nation’s history, one that will undoubtedly provide us with great opportunity in the years ahead, but the Government are acutely aware that at this time they also have a great responsibility to provide certainty to people and businesses and to preserve this nation’s unity, and the fundamental purpose of this Bill is to achieve those goals. It seeks to ensure that businesses in every part of the UK can continue to trade smoothly after the end of the transition period, but its particular focus is on businesses based in Northern Ireland or those that work with Northern Ireland companies.

The Government have always been clear that we must deliver on our pledge to provide unfettered access for Northern Ireland’s businesses to the rest of the UK internal market, and we have been equally unstinting in our determination to uphold our commitments to the people of Northern Ireland under the Northern Ireland protocol and to protect the progress made under the Belfast Good Friday agreement. This Bill will help us support those commitments by providing legal certainty for the customs, VAT and excise systems in Northern Ireland after the end of the transition period.

If I may, I will start with the customs elements of the Bill. The House will know that the UK is a single customs territory, with article 4 of the Northern Ireland protocol giving a clear legal commitment to this. However, the protocol also requires a new and unique set of arrangements to be put in place for goods moving from Great Britain to Northern Ireland. Under these arrangements, the only circumstance in which there should be charges on goods moving between Great Britain and Northern Ireland is if those goods are destined for the EU single market or there is a clear and substantial risk that they may be.

[John Redwood (Wokingham) (Con)]

I am grateful to the Minister for giving way in this Second Reading debate before we get to Committee. Will he confirm that under the proposals in this last legislation the European Court of Justice will be the ultimate arbiter of excise and VAT arrangements within Northern Ireland, and that the European Union will be placing staff in our country to supervise this?

[Jesse Norman]

VAT in Northern Ireland will be subject to the EU principal VAT directive, and for that purpose the ECJ will be the judicial body. I cannot comment as to whether or not there will be anything more than staff, except to say that excise processes in Northern Ireland will be carried out by Her Majesty’s Revenue and Customs.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

The Minister was asked by his right hon. Friend the Member for Wokingham (John Redwood) whether the ECJ would be the ultimate arbiter, and the Minister replied that it would be the judicial authority. Is that the same thing?

[Jesse Norman]

Yes, I was simply paraphrasing the point that my right hon. Friend made.

Under the terms of the protocol, we need to treat goods at risk of such onward movement into the EU differently from those groups that are not at risk. On the specific details of what will be defined as at risk or not at risk, the House will be aware of the EU-UK joint agreement made this week setting out that an agreement has been reached in principle regarding the implementation of the Northern Ireland protocol. In accordance with that statement, the draft texts will now be subject to further consideration in both the EU and the UK. Once that is complete, a joint committee will be convened to adopt them formally. Further details will be set out in due course, and before the end of the year.

[Sir William Cash (Stone) (Con)]

In reply to my right hon. Friend the Member for Wokingham (John Redwood) and the right hon. Member for Orkney and Shetland (Mr Carmichael), the question of jurisdiction was raised, and perhaps it is best to use the right expression, rather than paraphrasing. The fact remains that EU officials will be there for the purposes of enforcing the jurisdiction of the European legal arrangements, which will be enforced subject to the European Court. In those circumstances, will the Minister now accept that actually there is an infringement of sovereignty in that respect? As the “notwithstanding” clauses are being taken out, there is therefore a further complication, and if I may say so respectfully, that is slightly in contradiction of his allegation that we would now take over as a sovereign, fully independent power.

[Jesse Norman]

I thank my hon. Friend for the question. He is right that it is expected that there will be EU officials. The checks will be levied and done by HMRC inspectors, and the system that we are putting in place gives effect to the Northern Ireland protocol, which, as he will recognise, already recognises the balance that is being struck in Northern Ireland between its status under the Union customs code and its status within the UK customs system.

If I may proceed, the Bill will allow the Government to put in place decisions made by the Joint Committee on goods that are not at risk of entering the EU, ensuring that they do not have to pay the EU tariff. However, if I may underline the point, this Bill does not itself seek to specify the classes or categories of goods or movements that are at risk or not at risk. Instead, that will be set out by regulations that the Bill permits us to make once legal texts have been formally adopted. The “at risk” or “not at risk” definitions will also determine whether the UK or EU tariff applies when goods arrive in Northern Ireland from rest-of-the-world countries, again in line with the Northern Ireland protocol.

In relation to the so-called “notwithstanding” clauses, as part of yesterday’s EU-UK joint statement, the Government have agreed not to introduce these provisions into this Bill, and we have also committed to remove the three “notwithstanding” clauses from the United Kingdom Internal Market Bill.

[Sir William Cash]

Will my right hon. Friend give way?

[Jesse Norman]

I suspect we are going to go around this many times, but I am happy to give way again.

[Sir William Cash]

Could I simply say to my right hon. Friend that this does raise a question? I am not going to go into it in an intervention on him, but I will in my speech. I believe that those provisions may well be needed, because we do not know the outcome of the negotiations yet. I will leave it at that for the moment. We do not know, but we have been told that the clauses are going to come out. The question of whether they should have been put in is a separate question, which I dealt with yesterday.

[Jesse Norman]

I am not quite sure where that was heading, but we have the Bill in front of us and the Government have made it clear that the so-called “notwithstanding” clauses will not be introduced.

The legislation follows from commitments made in the Government’s Command Paper on the implementation of the protocol, which was published in May. The Bill will ensure that EU goods moving into Northern Ireland remain free from customs duties or processes. Although we recognise and are addressing the challenges relating to the movement of goods from Great Britain to Northern Ireland, we should not lose sight of the benefits to Northern Ireland of having continuing access to the EU market.

In addition, this legislation will ensure that the UK customs regime applies to goods moved from Northern Ireland to Great Britain if they do not qualify for unfettered access. The Bill will also introduce anti-avoidance rules to prevent goods from being rerouted through Northern Ireland to avoid UK customs duties or associated obligations, and its measures will ensure that customs enforcement and penalties, along with review and appeal processes, are in place in relation to duty and that they continue to work alongside EU legislation in Northern Ireland and can be applied, where required, to movements of goods between Northern Ireland and Great Britain.

[Stephen Farry (North Down) (Alliance)]

I welcome the thrust of the Bill. We have heard a lot about the anti-avoidance approach in recent months, but we have never seen any detail as to how it will work. This is a critical issue, particularly for the agrifood sector, to make sure that inferior product is not coming into Northern Ireland and taking advantage of the protocol, and there is the risk of organised crime in Ireland as well. When will we see detail on exactly how it will look?

[Jesse Norman]

As the hon. Gentleman will know, goods that are, as it were, normally circulating in Northern Ireland will be open to go into Great Britain from the beginning. There will be some goods that, over time, will be designated as non-qualifying goods for these purposes, and HMRC has well established practices for identifying, discussing and targeting those, as may be necessary, and will be applying them to prevent avoidance and to keep the market honest.

As I have said, the Bill will ensure that the UK customs regime applies to goods moving from Northern Ireland to Great Britain if they do not qualify for unfettered access. These anti-avoidance rules will prevent goods from being rerouted through Northern Ireland to avoid UK customs duties or associated obligations, and its measures will ensure that customs enforcement and penalties, along with review and appeal processes, continue to work alongside EU legislation in Northern Ireland and can be applied, where required, to movements of goods between Northern Ireland and Great Britain.

The Bill also amends and modifies certain provisions in relation to VAT and excise for Northern Ireland.

[Mr Toby Perkins (Chesterfield) (Lab)]

In many of these debates over the past four years, the Government have referred to “frictionless trade” between the mainland and Northern Ireland. The Government now say that they want VAT accounting treatment for goods moving between Great Britain and Northern Ireland to remain “as close as possible” to the current approach. Will the Minister confirm whether we have now accepted that frictionless trade is not possible? Can he tell us a little more about what “as close as possible” actually means for businesses in Northern Ireland that are looking forward to 1 January with some trepidation?

[Jesse Norman]

I thank the hon. Gentleman for his question and, yes, the legal basis on which VAT is charged will change. I will spare him the details of the difference between import VAT and acquisition VAT, but it will change. The experience of those who pay VAT will be very similar, if not identical, to the system we have in place at the moment. HMRC and the Government have identified flexibilities, which allow that to be put in place. Of course, there will continue to be the normal processes of enforcement that one would expect to see from HMRC in order to make sure that VAT is properly paid in the usual way.

[John Redwood]

These are urgent and important issues. We heard earlier from the Chancellor of the Duchy of Lancaster that there are various delays to the full implementation of trade arrangements into and out of Northern Ireland as a result of his negotiations. Will they be incorporated into this legislation, and do they provide a brake on the immediate introduction of these complex double-taxation arrangements?

[Jesse Norman]

I have no doubt that the Chancellor of the Duchy of Lancaster will be updating the House over time as the different provisions he has negotiated come into force but, from our point of view, the position remains as stated, that is to say that VAT will become chargeable by a slightly different legal means, but in substantially the same way in Northern Ireland as it is at the moment. The mechanisms we have put in place are designed to ensure that, as far as possible, VAT will be accounted for in the same way as it is today.

Existing rules in relation to movements of goods between Northern Ireland in the EU, including the rules relating to acquisitions and distance selling, will continue to apply. Goods entering Great Britain from Northern Ireland will be subject to VAT as though they were imports under the relevant UK legislation. Similarly, goods entering Northern Ireland from Great Britain will also be subject to VAT as though they were imports and relevant EU or UK legislation will apply, but let me add that the Government are adopting an approach that minimises any changes for goods moving between Northern Ireland and Great Britain.

[Stephen Flynn (Aberdeen South) (SNP)]

On a point of order, Mr Deputy Speaker, can you clarify whether Members in the Chamber should be socially distancing by staying on the seats that have ticks on them?

[Mr Deputy Speaker (Mr Nigel Evans)]

Yes, that is what the ticks are there for. I hope that all Members will abide by them so that we can have safe social distancing. Thank you very much.

[Jesse Norman]

In addition, the Bill amends current legislation for excise duty to be charged when certain goods, such as alcohol and tobacco, are moved from Great Britain to Northern Ireland. The changes are necessary to ensure that there is a fully functioning VAT and excise regime in place in relation to Northern Ireland at the end of the transition period.

In line with the protocol, Northern Ireland will maintain alignment with existing EU excise rules. That means a change to excise duty is required when goods are moved to Northern Ireland from Great Britain, but the Government are adopting an approach using flexibilities and EU rules that minimises changes for excise goods moving between Great Britain and Northern Ireland.

A small number of other taxation measures also need to be in place before the end of the transition period. The Bill introduces a new system for collecting VAT on cross-border goods. That includes moving VAT collection on certain imported goods away from the border and involving operators of online marketplaces in the collection of VAT at the point of sale.

In addition, measures in the Bill will remove the VAT relief on imported low-value items so that VAT will be due on all consignments, irrespective of their value. The relief has been the subject of long-standing abuse and removing it will build on Government efforts to level the playing field for UK businesses still further by protecting high streets from VAT-free imports. Together, the changes will improve the effectiveness of VAT collection on imported goods, tackle non-compliance and protect the flow of goods at the border.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I very much support the measures that the Minister is talking about. Why is the measure just for low-value goods? There will be other goods where a similar loophole applies, such as watches or jewellery that have a value above £135. Is this not an opportunity to close that loophole as well?

[Jesse Norman]

I thank my hon. Friend for his question, and I will take that under review. We have put in place a set of measures designed to tidy up the position that particularly arises in relation to the Northern Ireland protocol, as he will be aware, and the end of the transition period, and that has meant a change to low-value consignment relief and the changes I have described. I am grateful to him for his contribution and suggestion.

The Bill also includes provision for an increase in the rate of duty on aviation gasoline, which will apply across the UK. Otherwise known as avgas, the fuel is a form of leaded petrol predominantly used in leisure flying. The change made by clause 6 of the Bill will increase the avgas rate by half of a penny to 38.2p a litre from 1 January next year. By way of explanation, the Northern Ireland protocol requires that Northern Ireland continues to comply with the EU’s energy taxation directive following the end of the transition period. It sets a minimum level of duty in euros on unleaded petrol used for propulsion. After some careful consideration, the Government have chosen to apply the change to the whole of the UK to ensure consistency between Great Britain and Northern Ireland, avoid burdens on business and reduce compliance risks for HMRC.

The Bill also includes a clause to ensure HMRC has access to the same or similar tools to prevent insurance premium tax evasion as it does at present, regardless of whether an insurer is based in an EU member state. Overseas insurers are liable to pay insurance premium tax when they supply general insurance for UK-located risks. Occasionally, overseas insurers do not pay the insurance premium tax they owe, so it is important that HMRC has access to tools that deter and tackle that form of evasion. Up to now, it has been using EU provisions to prevent evasion by insurers based in EU member states.

Separately, HMRC can issue liability notices in cases involving insurers based in any country outside the EU with which the UK does not have a mutual assistance agreement. Given that the EU provisions expire at the end of the transition period, this clause will enable HMRC to issue liability notices in evasion cases involving insurers based in any country with which the UK does not have a mutual assistance agreement, including EU member states.

Finally, the Bill introduces new powers that will enable HMRC to raise tax charges under the controlled foreign companies legislation for the period from 1 January 2013 to 31 December 2018. This is a technical provision that will deal efficiently with the legacy state aid decision relating to the period before the UK left the European Union.

This Bill will give people and businesses throughout the UK certainty about the arrangements that will apply from 1 January next year. It will play a part in further safeguarding the unity and integrity of this country, both in the months ahead and long into the future. I commend the Bill to the House.

[Mr Deputy Speaker (Mr Nigel Evans)]

Before I call Anneliese Dodds, let me say that the wind-ups will begin at 5 o’clock at the latest, and that 13 Members wish to speak and are all here. We therefore know that there will definitely be 13 Members speaking, so colleagues should really be thinking about speeches lasting for six minutes. Even if I do not put the clock on, it would be really useful if everybody shows at least some discipline on that, so that everybody can get a fair crack of the whip.

--- Later in debate ---

[Anneliese Dodds]

I am pleased that the hon. Gentleman mentions that situation, because it has been referred to by those who favoured the Government’s approach previously. However, I gently state to him that if he is referring in particular to provisions against tax avoidance—the example of a general anti-avoidance rule—then, sadly, I believe he is mistaken. In that case, that commitment and the ability to apply such rules was actually a fundamental principle agreed to by this country as part of a multilateral agreement that it concluded with the OECD, so I fear that that example is not as telling as he may wish it to be.

With just three weeks to go until the end of the transition period, the Government published late yesterday afternoon the 116-page Bill that we are discussing now, setting out detailed new rules for tax and customs duties. Members of this House have been given less than 24 hours to scrutinise a major piece of post-Brexit legislation that will impact businesses and individuals across the country, especially in Northern Ireland. Many of the clauses in the Bill, particularly those covering customs and excise duties, require the Treasury to make regulations that will set out the actual detail of its proposals at a later date, so even with the publication of the Bill, businesses and individuals still do not have the information they need to prepare for the end of the transition period.

Earlier today, the Chancellor of the Duchy of Lancaster said there would be “further clarity” forthcoming on these matters, but again without saying when. In fact, the Minister talked a few moments ago about those details coming in due course. His letter to Members spoke about the fact that there would be information on this later; “in the coming days” was the formulation at that time. How can he really expect businesses to plan on that basis—on the never-never up to 1 January?

This last-minute approach was not necessary. It is no use pointing to the complexity of the ongoing negotiations. We know that this Bill could have been published a long time ago because the Government have been floating a Finance Bill for months, so why yet another last- minute scramble? My right hon. Friend the Member for Wolverhampton South East (Mr McFadden) set it out very clearly: because the Conservatives had a not-so-cunning plan to use this Bill as negotiations reached a critical point by threatening to override the withdrawal agreement. At a time when we are seeking to negotiate new trading relationships across the international community, and when the Government are trying to project an image of global Britain to the world, this tactic certainly sent a clear message, albeit not the message the Government intended.

It is welcome that the Government finally saw sense yesterday, although we have already seen damage being done. Both in relation to the provisions in the Bill and more generally, the time is running out to ready our country for the challenges ahead. The Public Accounts Committee was clear last week that:

“Government is not doing enough to ensure businesses and citizens will be ready for the end of the transition period”.

It expressed concern at reports from industry bodies that the Government had not provided the key information needed for businesses to prepare. Indeed, the Committee indicated that more than a third of small and medium-sized enterprises still believed that the transition period would be extended.

The Cabinet Office has admitted that it is well behind in recruiting the customs agents desperately needed for 1 January, despite more than £80 million having been spent so far. Yet again, earlier today, the Chancellor of the Duchy of Lancaster refused to specify exactly how many additional customs agents had been recruited. Overall, £4.4 billion has been spent by the Government on preparations for Brexit and the end of the transition period, yet we are still not ready.

[Jesse Norman]

I am terribly grateful to the hon. Lady for giving way. She has criticised the Government for spending £80 million in support of traders and a facilitated approach to the border. Could she tell us whether she thinks that number is too large or too small?

[Anneliese Dodds]

With enormous respect to the Minister, the problem with his Government’s approach is the fact that they do not indicate what they have got with that spending. As I said, £4.4 billion has been spent on preparedness for Brexit and for the end of the transition period, and the £80 million that he refers to, but there is no indication from the Government of how many additional customs officers we have received as a result of that spending. I hoped that he was intervening on me to provide an indication of the additional workforce that has been recruited. It is a matter of regret that he was unable to do so.

Taxation (Post-transition Period) Bill

Jesse Norman Excerpts

Committee stage & Committee: 1st sitting & Committee: 1st sitting: House of Commons
Wednesday 9th December 2020 Commons Chamber

[Andrew Griffith]

I beg to differ with the hon. Lady. There will be different systems for different territories, but on the business side of things there is already sophisticated tracking of stock, sales and data, which can be used to feed into accounting systems.

What I really want to do is to celebrate—I hope that those on both sides of the House can do that—the absolute game-changer that is contained within clause 7 to crack down on the leakage of the important tax revenues that fund our valued public services, and, most importantly, to create a level playing field for the nation’s small and online retailers. That has needed to be addressed for far too long. I welcome the Minister to his place and what clause 7 will do for the enterprising small businesses of our nation.

[The Financial Secretary to the Treasury (Jesse Norman)]

Dame Rosie, what a delight it is to see you in the Chair, metaphorically if not actually.

It is a measure of the wide gulf between the House’s professed intentions and its actual activities that we are about to wind up within a very few minutes, and nothing like to time, the scrutiny of the Bill in Committee. I thank those who have spoken. Let me do service on my part by keeping my remarks brief, although I will say that nothing could have surprised me more than that my hon. Friend the Member for Stone (Sir William Cash) will not be taking the opportunity to make a trivial two-hour speech.

The right hon. Member for Wolverhampton South East (Mr McFadden) said that somehow the Government were pretending there was no change. Of course, he then went on to say that nothing has changed. We are not pretending anything. We acknowledge that there is change and that is specifically why we have used the language we have of making the changes as easy and as frictionless as possible for all parties concerned.

The right hon. Gentleman raises concerns and questions about Northern Ireland. I remind him that the Trader Support Service, which was launched on 28 September, has 18,000 subscribers already. He asks us to publish guidance. I can tell him that guidance has been published already, on 26 October.

The hon. Member for Glasgow Central (Alison Thewliss) saw Brexit—rather helpfully—as an opportunity to return powers to Parliament. How right she was. That is why I am a supporter of the United Kingdom of Great Britain and Northern Ireland, and of the Parliament that stands at its centre. My hon. Friend the Member for Arundel and South Downs (Andrew Griffith) rightly said that it should be for the Bill to make matters as easy as possible. I agree with that. He pointed to the absolute game-changer in clause 7. I agree with that too.

[The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)]

I believe the right hon. Member for Wolverhampton South East may wish to withdraw his amendment.

Taxation (Post-transition Period) Bill: Business of the House

Jesse Norman Excerpts

Wednesday 9th December 2020 Commons Chamber

[The Financial Secretary to the Treasury (Jesse Norman)]

I would simply say this in response to the right hon. Gentleman: the Government have been moving at great speed, and much of the regulation is already in the public domain, together with an enormous amount of further communications and support systems. The Government are putting in front of the House today a Bill that encodes the Northern Ireland protocol and a Command Paper that has been in the public domain for many months, and if the right hon. Gentleman wished to have more scrutiny, he perhaps might have considered not having a debate on this motion.

[Madam Deputy Speaker (Dame Eleanor Laing)]

I am aware that some Members would like to make points on this, but I am afraid that it is not in order for them to do so, because under current rules I have to stick to the speaking list. Just as a matter of fact, interventions would have been fine, but not speeches.

Question put and agreed to.