Question to the HM Treasury:

To ask the Chancellor of the Exchequer, with reference to section 15 of and schedule 3 to the Finance (No.3) Act 2018, what estimate he has made of the annual cost to the public purse of the exemption from tax on offshore receipts in respect of intangible property.

The taxation of offshore receipts in respect of intangible property was a new measure enacted in Section 15 of and Schedule 3 to the Finance Act 2019. The measure applies a direct UK Income tax charge to amounts received in a low tax jurisdiction in respect of intangible property, to the extent that those amounts are referable to the sale of goods or services in the UK. It is forecast to raise over £1.1 billion over five years, as follows:

Exchequer impact (£m)

The measure, as enacted, includes three exemptions: a de minimis of £10m of UK sales, an exemption for business undertaken in the territory of residence, and an exemption where tax is being charged at 50% or more of the UK tax. These exemptions aim to target the legislation at multinational groups which generate significant income from intangible property through UK sales and which have made arrangements such that the income is received in offshore jurisdictions where it is taxed at no or low effective rates. The yield forecast for the measure was based on the rules as defined in the legislation.