Draft Major Sporting Events (Income Tax Exemption) Regulations 2016

Rebecca Long Bailey Excerpts

Monday 11th July 2016 General Committees

[Rebecca Long Bailey (Salford and Eccles) (Lab)]

It is a delight to serve under your chairmanship, Sir Edward. It is also a pleasure to be back in a Committee with the Financial Secretary to the Treasury after what I hope was a welcome rest over the weekend for both of us.

The draft regulations exempt non-resident competitors in the 2017 world athletics and Paralympics championships and the 2016 anniversary games from income tax on their earnings from the event. The idea of exempting earnings from major sporting events from income tax for non-UK residents is not new; indeed, it goes back to 2006 and 2010, when the Labour Government introduced special provisions to exempt non-residents who were coming to the UK to take part in certain sporting events—the 2012 London Olympics and the 2011 champions league final. Exemptions of that kind have historically been made through primary legislation in Finance Bills, but the Government announced in the 2014 Budget that they would legislate to enable income and corporation tax relief to be given in relation to major sporting events via secondary legislation. Provision to that effect was made in section 48 of the Finance Act 2014 and the draft regulations are the first set of exemptions made by virtue of the powers granted.

The Minister will be aware that the Opposition were not opposed to the principle of providing tax exemptions for certain sporting events, but we expressed concern about the uncertainty regarding the Government’s approach to selecting such events. During the passage of the Finance Act 2014 we moved an amendment to publish a formal review of those decisions every five years. Speaking for the Opposition at the time, my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) stated

“tax exemptions for sporting events have been dealt with on an ad hoc basis in Finance Bill to Finance Bill. As a result, some athletes and professional sportsmen and women have benefited from exemptions from some sporting events, while others have not.”

She also said:

“Clause 45 and our amendment 13 address this piecemeal legislation relating to sporting events and the fact that the issue recurs at every Finance Bill.”

At that time we questioned what other sporting events the Government envisaged becoming eligible for tax exemptions for non-resident competitors and whether the Government planned to extend the number and range of events that were eligible. Our amendment would have required a review of how the power was being used in that respect. Sadly, the Government did not support the amendment at the time, stating:

“The Government might use the power only once in the next five years, for example, so undertaking to publish reviews to such a schedule would not be proportionate.”––[Official Report, Finance Public Bill Committee, 8 May 2014; c. 238-239, 243-244.]

I appreciate that the Government have only used the power once since it was introduced—in the statutory instrument before us today, which makes provision only for the 2017 world athletics and Paralympics championships and the 2016 London anniversary games—but will the Minister confirm whether the Government have plans to extend the scope of those tax emptions beyond football, athletics and the Olympic and Commonwealth games?

I am particularly concerned about the gender inequality inherent in the relief. Will the Minister confirm whether women’s events are being treated equally? For example, was the UEFA women’s Champions League final held at Stamford Bridge in London on 23 May 2013 given the same tax exemption as the 2013 men’s Champions League final held at Wembley? I understand that it was not. Why do the Government deem the men’s game to be a major sporting event but not the women’s? The impact assessment for that specific legislation stated that the measure was likely to affect more men than women. Those anomalies are exactly why the Opposition called for a review of the legislation every five years, so that we could see the Government’s approach to selecting events. It seems to me that there is an ingrained gender inequality that the Government must address, and I welcome the Minister’s comments in that regard.

I am also concerned that no tax information and impact note has been published for the instrument, despite the explanatory memorandum stating it would be published on the usual section of gov.uk. Prior to coming to the Committee, the only available note I could find there related to the 2014 Act and not the statutory instrument. Will the Minister confirm what impact analysis has been carried out, especially on equality? Will he also clarify what measures are in place to ensure that this relief and others are not used for tax avoidance?

Turning to the events listed in the statutory instrument, it is my understanding that the tax exemption was a condition of the international bidding process for all countries that wanted to host the 2017 world athletics championships. Which international bodies made the exemption a condition of the bidding process? While no doubt appreciating the economic benefit that such sporting events bring to local economies, does the Minister think it right that international sporting bodies should force Governments across the world, not just in the UK, to make an income tax exemption a requirement of hosting specific sporting events?

The Government state that the exemption for the 2016 anniversary games is designed to support the legacy of the 2012 London Olympic and Paralympic games, which were great sporting events that many people across the country thoroughly enjoyed. As an aside from the regulations, I would be interested generally to know whether the Government have made any assessment of the economic effect of the legacy of the games in the immediate Newham area.

The regulations are a continuation of the policy of both the previous Government and the last Labour Government of exempting from income tax non-resident competitors’ earnings from some major sporting events, and we will not oppose them. However, I hope that the Minister can give satisfactory reassurances on the concerns that I have outlined.