Finance (No. 2) Bill

Debate between Mel Stride and Lucy Frazer

Report stage
Wednesday 2nd February 2022 Commons Chamber

[Lucy Frazer]

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

[Mel Stride (Central Devon) (Con)]

Am I right in assuming that the purpose of the new tax is to discourage certain types of behaviour rather than to raise revenue?

[Lucy Frazer]

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

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

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

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

Oral Answers to Questions

Debate between Mel Stride and Lucy Frazer

Tuesday 7th December 2021 Commons Chamber

[Mel Stride (Central Devon) (Con)]

I am sure that my right hon. and learned Friend and HMRC are working very hard to ensure that the changes to the import processes coming in on 1 January run smoothly and do not result in lots of additional friction at the border. However, the Federation of Small Businesses has estimated that just one in four smaller companies is actually prepared for the changes that are about to happen. Is she aware of that particular issue? If she is, what action is she taking in the short time that remains?

[Lucy Frazer]

My right hon. Friend makes an important point. The Government and HMRC have taken significant action to ensure that hauliers and carriers are ready. HMRC has weekly meetings with strategic operators. It has conducted webinars for well over 1,000 haulage businesses and it sends monthly emails to more than 14,000 hauliers on the next steps. I appreciate that it might be that big businesses are more ready than small businesses, but we have done work there as well. I am very pleased to have met the Federation of Small Businesses about two weeks ago to discuss these issues.

Finance Bill

Debate between Mel Stride and Lucy Frazer

Tuesday 12th September 2017 Commons Chamber

[Mel Stride]

There are other considerations that the hon. Gentleman should focus on when he looks at individuals setting up in business, and there are many successful entrepreneurs throughout our country. We are the party and Government who have reduced taxation on business. It used to be 28% under the last Government and we have brought it down now to 19% and it will be further reduced to 17% over time. So the hon. Gentleman should look at this in the round, and I persist in my point that we need to look at the different tax consequences of the different models—an individual going into business on their own, whether as a sole trader or partner, or in an incorporated structure—to make sure we do not have people effectively just using one model for no other reason than the tax advantages thereof.

[Lucy Frazer (South East Cambridgeshire) (Con)]

My right hon. Friend refers to the importance of working out different tax models and how they affect the economy and the individual. Does he agree that Labour’s policy to increase tax negatively affects individuals’ income, investment to this country and therefore the country’s economy as a whole?

[Mel Stride]

My hon. and learned Friend is entirely right. As I have said, we are the party of bringing down corporation tax and small business tax, and we continue to bring those taxes down. The Labour party’s current policy is to raise corporation tax to 26%, which is going to do very little to encourage entrepreneurship in this country; it will in fact do the reverse. It must also be borne in mind that, on personal tax, it is Labour’s policy to start dragging more people into the higher tax rate, whereas it is this Government’s policy, through increasing the personal allowance, to take people out of tax and lower the tax burden entirely.

--- Later in debate ---

[Mel Stride]

The hon. Lady may be aware that in the consultation we received the message from businesses that they broadly welcome these changes as we move into the digital age and do things more efficiently and effectively. However, businesses did have concerns, to which we have listened, about the timing and pace of the changes we originally proposed. The policy is robust, but the Government and I are determined to get the changes right and to make them at the right pace that suits those companies.

[Lucy Frazer]

Does my hon. Friend remember that in 2010, when the digitisation of VAT was introduced, more than half of businesses with a turnover of more than £100,000 signed up voluntarily? Does that show that moving to the new economy and technology is welcomed by many?

[Mel Stride]

My hon. and learned Friend is absolutely right. In my meetings with the Federation of Small Businesses we have all concluded and agreed that this is the right direction. Indeed, we will make provision to ensure that such businesses, although they will not be mandated to become part of this new regime, will have the opportunity to do so voluntarily, and I believe that a very large number of companies will wish to take that opportunity.