Finance Bill (Second sitting)

Roger Mullin Excerpts

Thursday 30th June 2016 Public Bill Committees

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

It is a pleasure to serve under your chairmanship again, Mr Howarth. I will be brief. We on the Scottish National party Benches support the amendment. The issue of carried interest has also been of interest to us, as the Minister knows only too well. I commend the amendment, and if the Labour party wishes to press it to a vote, we will certainly support it.

[Mr Gauke]

Let me address the issue of complexity; I hope I can be helpful to the Committee on that. The new rules replace the badges of trade that previously outlined the tax treatment of carried interest. The badges of trade are based on complex case law, which means that the law was determined by a wide range of varied and outdated judicial decisions. Bringing these new rules into legislation removes ambiguity and makes the tax code easier to follow. Furthermore, much of the detail of the legislation comprises bespoke rules that apply to specific types of funds. Those specialised rules will help reduce the compliance burden for funds in practice. Asset managers are sophisticated taxpayers who often have personal advisers; we therefore anticipate it being easy for those individuals to follow these rules.

Very often, the measure of tax complexity is taken to be the length of the tax code. I confess that I have sat where the hon. Member for Wolverhampton South West is sitting and made that point myself; he has heard me make it. In this example, there are additional pages of legislation; however, they are replacing legislation that took up fewer pages but was based on case law, which can be very complicated. It is worth pointing out the limitations of pages as a measurement of complexity.

On the OECD recommendations, treating carried interest as a capital gain rather than income is the right approach. It keeps the UK in step with other countries and, as I said, it is the approach adopted consistently by previous Governments in this country over a long time. There is nothing particularly unusual about the way in which we treat carried interest in this country. I am conscious that this is a matter that we debate on a fairly regular basis; it is the second time we have debated it in a week. We are being consistent with what we have done in this country for some time and with what other countries do. I hope those points are helpful, but if the hon. Gentleman presses amendment 8, I will urge my colleagues to oppose it.

Question put and agreed to.

Clause 36 accordingly ordered to stand part of the Bill.

Clause 37

Income-based carried interest

Amendments made: 43, in clause 37, page 67, line 45, leave out “value” and insert “amount”.

Amendment 44, in clause 37, page 68, line 41, leave out “company” and insert “underlying scheme”.

Amendment 45, in clause 37, page 68, line 43, leave out “a company” and insert “an underlying scheme”.

Amendment 46, in clause 37, page 68, line 47, leave out “value” and insert “amount”.

Amendment 47, in clause 37, page 70, line 15, leave out “company” and insert “underlying scheme”.

Amendment 48, in clause 37, page 70, line 21, leave out “value” and insert “amount”.

Amendment 49, in clause 37, page 70, line 34, at end insert

“, or the acquisition of portfolios of investments from,”.— (Mr Gauke.)