PARLIAMENTARY DEBATES HOUSE OF COMMONS OFFICIAL REPORT GENERAL COMMITTEES

Public Bill Committee

FINANCE BILL

(Except clauses 1, 5 to 7, 11, 72 to 74 and 112, schedule 1, and certain new clauses and new schedules) Fourteenth Sitting Tuesday 17 June 2014 (Afternoon)

CONTENTS

CLAUSES 212 to 221 agreed to, one with amendments. SCHEDULE 28 agreed to, with amendments. CLAUSES 222 to 226 agreed to, one with an amendment. SCHEDULE 29 agreed to. CLAUSES 227 to 230 agreed to. SCHEDULE 30 agreed to. CLAUSES 231 to 267 agreed to, some with amendments. SCHEDULE 31 agreed to, with an amendment. CLAUSES 268 to 274 agreed to, some with amendments. SCHEDULE 32 agreed to, with an amendment. CLAUSES 275 to 283 agreed to. SCHEDULE 33 agreed to. CLAUSES 285 to 290 agreed to. SCHEDULE 34 agreed to. CLAUSES 291 to 295 agreed to. New clauses considered. Bill, as amended, to be reported. Written evidence reported to the House.

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The Committee consisted of the following Members:

Chairs: †MARTIN CATON,MR GARY STREETER

Burt, Lorely (Solihull) (LD) † Mahmood, Shabana (Birmingham, Ladywood) † Dakin, Nic (Scunthorpe) (Lab) (Lab) † Dinenage, Caroline (Gosport) (Con) † McKenzie, Mr Iain (Inverclyde) (Lab) † Duddridge, James (Rochford and Southend East) † McKinnell, Catherine (Newcastle upon Tyne North) (Con) (Lab) † Elphicke, Charlie (Dover) (Con) † Mearns, Ian (Gateshead) (Lab) † Evans, Chris (Islwyn) (Lab/Co-op) † Menzies, Mark (Fylde) (Con) † Fuller, Richard (Bedford) (Con) † Morgan, Nicky (Financial Secretary to the Treasury) † Garnier, Mark (Wyre Forest) (Con) † Pearce, Teresa (Erith and Thamesmead) (Lab) † Gauke, Mr David (Exchequer Secretary to the † Pincher, Christopher (Tamworth) (Con) (Hastings and Rye) Treasury) † Rudd, Amber (Con) † Rutley, David (Macclesfield) (Con) † Gilmore, Sheila (Edinburgh East) (Lab) † Shelbrooke, Alec (Elmet and Rothwell) (Con) † Glindon, Mrs Mary (North Tyneside) (Lab) † Smith, Henry (Crawley) (Con) † Hames, Duncan (Chippenham) (LD) † Swales, Ian (Redcar) (LD) † Heaton-Harris, Chris (Daventry) (Con) † Vaz, Valerie (Walsall South) (Lab) † Jamieson, Cathy (Kilmarnock and Loudoun) (Lab/ † Wheeler, Heather (South Derbyshire) (Con) Co-op) † Williamson, Chris (Derby North) (Lab) † Kane, Mike (Wythenshawe and Sale East) (Lab) Wilson, Sammy (East Antrim) (DUP) † Kwarteng, Kwasi (Spelthorne) (Con) † Leadsom, Andrea (Economic Secretary to the Matthew Hamlyn, Kate Emms, Committee Clerks Treasury) † Leslie, Chris (Nottingham East) (Lab/Co-op) † attended the Committee 501 Public Bill CommitteeHOUSE OF COMMONS Finance Bill 502

That schedule 28 be the Twenty-eighth schedule to Public Bill Committee the Bill. Clauses 222 to 226 stand part. Tuesday 17 June 2014 Shabana Mahmood (Birmingham, Ladywood) (Lab): (Afternoon) Thank you very much, Mr Caton. In our previous session I introduced my remarks to this set of proposals, so I will not do so again. However, before I comment on [MARTIN CATON in the Chair] the points raised during the debate this morning, I want to look at the financial impact of the changes. Finance Bill The impact notes for the provisions estimate that accelerated payment notices relating to existing avoidance cases currently in dispute will be issued to 33,000 taxpayers. (Except clauses 1, 5 to 7, 11, 72 to 74 and 112, schedule 1, The revenue associated with the provisions is substantial. and certain new clauses and new schedules) Her Majesty’s Revenue and Customs estimates the notices will result in receipts of £340 million this year, £1.3 billion 2pm in 2015-16, £1.3 billion in 2016-17, £750 million in The Chair: Before we resume proceedings, I draw the 2017-18 and £385 million in 2018-19. It is important to Committee’s attention to a minor error in the selection stress that this is not a new revenue stream—the measures list. Clause 284 appears in the list, but that clause was bring forward money HMRC expects to collect by agreed by the Committee on 13 May. several years. The revenue expected to be raised by the extension of accelerated payments to cases covered by disclosure of Clause 212 tax avoidance schemes and by the general anti-abuse rule is significant, particularly as no cases have been CIRCUMSTANCES IN WHICH AN ACCELERATED PAYMENT deemed to have breached the GAAR yet. Will the NOTICE MAY BE GIVEN Minister explain how he has calculated those figures, Amendment proposed (this day): 32, in clause 212, especially in terms of the interplay with the GAAR? It page 141, line 3, leave out “tax”.—(Mr Gauke.) would be helpful if he could explain the methodology Question again proposed, That the amendment be that was used. We briefly discussed that point on Second made. Reading. Will he explain the details when he responds? We know that HMRC has an 80% win rate for the cases it pursues to litigation, which is an excellent rate The Chair: I remind the Committee that with this we to achieve, and we all hope it remains intact. However, are discussing the following: the win rate is different from the value of the claims that Government amendments 33 and 34. are won—they are two different things. Will the Minister Amendment 56, in clause 212, page 141, line 35, at tell the Committee the average value of an HMRC win? end insert— That would help the Committee to interrogate the figures “(8) The Chancellor of the Exchequer shall, within six months that were used in the costings. How confident is the of this Act receiving Royal Assent, publish a post Minister that the same success rate will apply to cases implementation review. heard on the GAAR since no cases have been heard (9) The Review referred to in subsection (8) above must in under the rule yet? particular examine— Our debate this morning was about retrospection and (a) the total number of accelerated payment notices the concerns of members of the public who fear they issued; will be caught by accelerated payment notices, and of (b) the number of accelerated payment notices issued to professional bodies. The debate turned on whether the cases involving a disclosure made under DOTAS measures were retrospective. The Minister stated that, prior to the Act receiving Royal Assent, because there is no change to underlying tax liability, (c) the total revenue collected through accelerated retrospection does not come into play. However, against payment notices; that, the Committee heard the argument put forward by (d) the total revenue collected through penalties arising as my hon. Friend the Member for Erith and Thamesmead, a result of accelerated payment notices; who pointed out that the measures impact on behaviour (e) the number of representations made to Her Majesty’s that cannot change because it has already occurred, and Revenue and Customs following the issuing of an therefore that retrospection and all associated issues accelerated payment notice; were engaged. (f) the number of accelerated payment notices that have been subsequently withdrawn; I found the Minister’s explanation on retrospection and the argument he and HMRC put forward to be (g) the financial consequences resulting from the issuance of accelerated payment notices for the businesses and persuasive. There is no indication of a new and unexpected taxpayers involved. tax liability—if that was the case, there would be no (10) The Chancellor of the Exchequer must publish the report doubt that the measures are retrospective. However, I of the review and lay the report before the House.”. do not believe that is the case. This feels much more like a situation where, to borrow a concept from another Clause stand part. aspect of our legal system, the legitimate expectations Clauses 213 to 221 stand part. of a taxpayer have been changed. When that happens, Government amendments 35 to 38. as it does in other aspects of our law, particularly when 503 Public Bill Committee17 JUNE 2014 Finance Bill 504 we discuss concepts of reasonableness in judicial reviews made by the Law Society and others, casting into question and other matters, if legitimate expectations of taxpayers whether the Opposition’s view in supporting the or others are changed, that mischief—the changing of Government is now a settled one or whether they are legitimate expectations—is remedied by the time-to-pay still open to representations from people who have arrangements, which should assist in righting any wrongs. come to a different conclusion about retrospection. For There is also the remedy of an interest payment on top the record, will she clarify the Opposition’s position? of the tax that was in dispute if it is found that it needs to be paid back to the taxpayer. If there is any unfairness Shabana Mahmood: I was coming on to exactly that as a result of the measures, it can be remedied by those point. I hope that once I have finished my remarks on other measures. retrospection, the hon. Gentleman will understand where the official Opposition are coming from. I will happily Ian Mearns (Gateshead) (Lab): I am not trying to be take further interventions from him to clarify things if unhelpful to my hon. Friend’s argument, but I have a necessary. sneaking suspicion that there will be greater and lesser levels of understanding among the people who are As I was explaining, my reading of the rules before us selling tax avoidance products and the purchasers. The is that we are not talking about a retrospective measure seller of the product might have a very good understanding in the normal way we understand retrospective measures. of exactly the points my hon. Friend has made, but the However, accepting that it is possible to plead the case purchaser might not. in the alternative—that the measure is retrospective due to its impact on behaviour that cannot now be changed— taking on board the fact that many senior commentators Shabana Mahmood: My hon. Friend makes an important and professional organisations have characterised the point that has been made forcefully by the many members measures as retrospective, and thinking about first principles, of the public who got in touch with members of the my first point is that our legal system has well established Committee. I would simply repeat a point made by the principles of natural justice and procedural fairness, Minister and others: we have to look at the context in which retrospection would, by its nature, offend. Therefore, which the measures will take effect. In the vast majority if we are to introduce retrospective measures, we should of cases, people were aware, or were made aware, of do so only in exceptional circumstances that are tightly what they needed to do in relation to DOTAS. That controlled, and only when they deal with the mischief brings into play the fact that the tax is in dispute, a that we are trying to remedy and go no further. That point made by the hon. Member for Dover in his was certainly the thinking behind the previous Labour speech. My construction of the measures before us Government’s introduction of one element of retrospection leads me to believe that the measures are not retrospective, into the tax system, which we discussed this morning. but I acknowledge that the point is at the very least That is certainly our approach now. arguable. Many of the professional bodies who have looked at it closely and the Law Society have made Looking at the retrospection case, as I said, on an strong and forceful representations that the measures alternative basis, I would say that there is still a strong are retrospective in effect. I do not think it is possible case for the kind of action that we are discussing. On for the Committee to dismiss that. that basis, although the arguments about retrospection are important and it is right that such points are made, I Charlie Elphicke (Dover) (Con): Does the hon. Lady would say that the practical and philosophical points agree that there is no such thing as a free lunch? The merge, because the system as it stands is successfully idea of a disappearing tax bill is something that at the gamed, which results in increased costs for the taxpayer. very least puts the taxpayer on inquiry as to how that We all ultimately lose out when such delays occur in the might have come to be so. Does she also agree that each system. It is important that Governments of all colours taxpayer has a responsibility to ensure that their tax and persuasions take practical measures to sort out the return is true, accurate and not misleading? Taxpayers practical problems with our system. must take that responsibility, but it also puts them on We have had some discussion about the fate of those inquiry. who have made a DOTAS disclosure in order to be on the safe side. They were some of the concerns raised by Shabana Mahmood: I agree with the hon. Gentleman my hon. Friend the Member for Erith and Thamesmead that all taxpayers have a responsibility for the content and members of the public. I am grateful for the Minister’s of their tax return. They are entitled to take advice. clarification on how DOTAS disclosures work and why Many people who do not understand the complexity of he does not think that those concerns are engaged, but I a very complex tax legitimately take advice. There is a remain concerned that there may be a reduced willingness point to be made about the reliance on advisers and to make DOTAS disclosures, which would be unwelcome. remedies against advisers when things go wrong. The I took from the Minister’s remarks this morning that Committee should bear that in mind. If people are he is aware of that risk. That is why we are going to get, ticking the box in relation to a DOTAS disclosure, it is as I understand it, a planned consultation on further fair to say that they are on notice that things may strengthening of DOTAS. When he responds, I would change and they may have to pay the amount of tax be grateful if he could share any further detail on the levies in dispute. matter with the Committee. I know that he will not be able to tell us totally what is coming up in the consultation, Richard Fuller (Bedford) (Con): I thank the hon. but some further detail would be welcome, particularly Lady for her opening remarks, which clearly outlined if we are responding to our constituents in relation to the pros and cons of the current position. Indeed, I may the argument about people doing things to be on the wish to copy her comments and send them to some of safe side and the behavioural change that might result my constituents. She has referred to representations in fewer DOTAS disclosures. 505 Public Bill CommitteeHOUSE OF COMMONS Finance Bill 506

[Shabana Mahmood] HMRC publish guidance on that? The Minister will be aware that the CIOT has already suggested that the It would also be helpful for the Minister to give us guidance should comprise four things. First, it should some further detail on the representations he has received explain in what form representations should be made; regarding accelerated payment notices and whether he secondly, explain the procedure that will be used to has received any examples of the so-called “on the safe consider the representations; thirdly, explain what factors side” DOTAS disclosures. Again, if we could have some it will take into account when making decisions; and detail of such circumstances, it would be helpful for the fourthly, provide an indication of how long it will take Committee, particularly given the public’s interest in to make its decision. I would welcome the Minister’s that aspect of the clauses. comments on that CIOT suggestion, as well as further I agree with the Minister that HMRC should not details of when guidance will be published. have its hands tied in enforcing powers on time to pay It is understandable that once an accelerated payment or pursuing bankruptcy notices against taxpayers who notice has been issued, HMRC would wish to collect fail to pay due tax. When the Minister responds, will he the amount in dispute in a timely manner. Clause 219 help the Committee to understand better how HMRC seeks to encourage such behaviour by imposing a penalty currently uses its powers, the number of cases and how where an accelerated payment is not made in accordance many bankruptcy notices are pursued? That would help with the issued notice. The penalty structure looks very the Committee respond to constituents’ concerns. similar to that applying to the late payment of tax under the self-assessment regime. However, the significant 2.15 pm difference is that the latter imposes 5% penalties after The Minister touched on the following point but I 30 days, six months and 12 months of the due date of did not catch all of his answer. HMRC guidance states: the payment of tax. As a result, penalties associated “The allocation or notification of a scheme reference number with accelerated payment notices are incurred 30 days does not indicate that HMRC accept that the scheme achieves or earlier than they would be under self-assessment, and is capable of achieving any purported tax advantage.” consequently a taxpayer who has received an accelerated Will the Minister explain what criteria alongside scheme payment notice at the same time as a follower notice reference numbers will be used by HMRC officials to would have a 90-day period in which to consider whether assess whether an accelerated payment notice will be to make representations against either, and contact issued? As I said, he touched on those points but HMRC to negotiate a time to pay arrangement. I would unfortunately I missed the beginning of his remarks. like to ask the Minister if there is a danger that such a system creates an incentive to make representations The level of revenue associated with accelerated payments against an accelerated payment notice, potentially creating will depend on the amount payable. The Minister will unnecessary work for HMRC. Has any assessment has be aware that many, including the Chartered Institute of been made of that? Did he consider whether aligning Taxation, are concerned about the proposed method for the accelerated payment notice penalty dates with the establishing the payable amount that lies solely with normal self-assessment penalty dates could work better HMRC. HMRC has said that it will issue a payment and to the mutual advantage of HMRC and taxpayers? notice to the best of the designated HMRC officers’ information and belief. I would like clarification of We discussed HMRC resourcing earlier today and, as what that might mean in practice. Will the Minister give with follower notices, this measure is expected to have a more detailed account of how the amount of an substantial HMRC resource implications as a large accelerated payment notice will be calculated? number of people begin a range of different legal challenges, On a more technical point, will the Minister tell us potentially including judicial review proceedings, an what will happen when there is an overlap between increase in closure applications through the tribunal follower cases, particularly where a follower case is and disputed enforcement activity. The impact note withdrawn, and the DOTAS scheme? How will HMRC states that deal with that? Clarification is needed on the withdrawal “Flexible legal resource options are being considered to meet of accelerated payment notices, following the withdrawal the expected demands of this work” of a follower notice. Clause 220(3) obliges HMRC to and that withdraw an accelerated payment notice where “The Government will ensure that Departments have the necessary “the follower notice to which it relates is withdrawn”. resources to deliver this key policy successfully.” In contrast, clause 220(2)(a) gives HMRC the authority The Minister mentioned 800 new staff. I would be to withdraw an accelerated payment notice but the term grateful for clarification about whether those are new “withdraw” is used only in connection with follower recruits or people being deployed from other parts of notices in the context of the alternative outcomes following HMRC. How far advanced is the process in terms of HMRC’s consideration of a taxpayer’s representations ensuring that new staff are ready to start dealing with against a follower notice. Will the Minister clarify whether APN cases as soon as the legislation becomes law? that means that HMRC is obliged to withdraw an accelerated payment notice only where the related follower The Exchequer Secretary to the Treasury (Mr David notice is withdrawn as a consequence of its consideration Gauke): It is a great pleasure to serve under your of the taxpayer’s representations? If that is not the case, chairmanship this afternoon, Mr Caton, for the last of will the Minister indicate in what other circumstances a this year’s Finance Bill procedures in Committee. Let follower notice would be withdrawn within the meaning me seek to address the various issues raised by Members of clause 220(3)? who rightly seek more information about the important Should taxpayers wish to dispute the accelerated measures. I am grateful for the tone of genuine inquiry payment notice, according to the clauses before us they but also note the Opposition’s broad support for the will be able to make representations to HMRC. Will measures. 507 Public Bill Committee17 JUNE 2014 Finance Bill 508

The issue of retrospection was raised by the hon. In cases of genuine hardship, as I have said, HMRC will Member for Erith and Thamesmead, who brings her consider alternative payment arrangements, as it does considerable experience in the tax world to these matters. with any debt. I maintain that the measure is not retrospective for the reasons I set out earlier. The rules regarding whether HMRC always ensures that its action is proportionate. the taxpayer’s scheme works are not being changed. Where individuals do not immediately have the cash, it What is changing is who holds the money while there is may be appropriate in some instances to back up a an ongoing dispute. We have to note that this is money payment arrangement with a security against assets. In the individual would have already paid if they had not cases where, for instance, individuals have taken deliberate entered into the avoidance scheme. The taxpayer can action to put their assets out of reach of HMRC—I continue to dispute the case and will be paid with have certainly received a tweet or two suggesting that interest should they win. We are not restricting people’s people were going to do that—so that they cannot pay rights. Prudent taxpayers should have recognised that the tax, bankruptcy action may well be appropriate, but tax avoidance carries a significant risk of not working. the particular action will always depend on the precise The tax will become payable and they should therefore facts and circumstances of the taxpayer. make plans for such an outcome. On some of the practical issues involving the impact The point was made that, if this is about changing on HMRC and the tribunal—the hon. Member for behaviour, it should only apply to arrangements people Birmingham, Ladywood asked about the impact of enter into after the measures come into effect. The point legal challenges on HMRC—the measures are expected I would make in response is that new rules are intended to prompt a range of legal challenges, including judicial to achieve two things: they change behaviour away from review proceedings, an increase in closure applications avoidance but have the additional objective of accelerating to the tribunal and disputed enforcement activity. Flexible the resolution of the large number of existing cases and legal resource options are being considered to meet the the receipt of the revenue tied up in them. We want all expected demands of the work. That legal resource will taxpayers in this type of dispute to be in the same be increased and adapted depending on the scale and predicament so that there is no reason to apply the rules scope of any challenges. The Government will ensure differently depending on when the particular arrangements Departments have the necessary resources to deliver began. this key policy successfully.

Duncan Hames (Chippenham) (LD): I note the point that the Minister is making, but will he further clarify 2.30 pm for the Committee whether the powers that he seeks The hon. Member for Erith and Thamesmead asked reach back to disputed tax liabilities relating to periods whether the tribunals and courts will be able to cope prior to the introduction of the DOTAS reporting? with the extra work. HMRC is in discussion with the Ministry of Justice to plan for the introduction of these measures and to deal with the likely consequences. Mr Gauke: No, they do not. This applies to arrangements where a DOTAS notification has been made—DOTAS The hon. Member for Birmingham, Ladywood asked was introduced in 2004—or those that fail to comply how we can be sure we get the yield that was included in with the general anti-abuse rule, which we introduced the Budget scorecard, so I will say a little about how last year. It essentially goes back to the introduction of those numbers were calculated. The accelerated payment DOTAS. The structure of it means that it does not costings are based on HMRC administrative data, and apply to any cases before that. the Office for Budget Responsibility certified that they The hon. Member for Erith and Thamesmead asked are reasonable, given the information available. They whether HMRC already has enough powers in this include some assumptions about valid reasons why respect. HMRC can already refuse repayments of tax in HMRC might not receive the full value of the payment, avoidance cases while the matter is investigated and such as litigation losses and customer payment profiles, mitigated. In fact, most people pay their tax up front which have the effect of reducing the potential revenues and can apply for a refund afterwards, for example to the estimates provided at Budget 2014. The costings under PAYE, VAT or tax on interest income, but most take into account the direct effects of a policy, including, avoiders can currently claim a tax advantage through where appropriate, direct behavioural responses, such self-assessment and hold on to the moneys during the as levels of compliance and evidence of attrition in the often lengthy dispute. The measures before us will put yield, drawn from previous experience of anti-avoidance people on the same footing and remove the cash flow measures. The majority of the effects relate to DOTAS advantage that some avoiders enjoy at the moment. schemes, for the obvious reason that the GAAR has only just come into force, and it will take some time for The question of time to pay and how many arrangements the first cases to come through. HMRC expects to agree is difficult to answer. It will depend on the specific circumstances of individual A question was asked about the average value of a taxpayers. In cases of genuine hardship, HMRC will win for HMRC. It is difficult to give an answer, but consider alternative payment arrangements, as it does some assumptions were made for the calculation. HMRC with any debt. The priority in cases of genuine hardship expects the 80% success rate that we have talked about will be to get people on to a payment track so that the to be representative of the average amount. For the debt is paid as quickly as possible. The hon. Member general anti-abuse rule, accelerated payments will be for Birmingham, Ladywood also asked about time to required only after the independent panel has given an pay, seeking information on how it operates. HMRC opinion that the scheme is not reasonable. Therefore, will issue clear “pay now” notices to taxpayers setting the success rate should be at least as high, because it will out how much needs to be paid under the measures. have already received independent scrutiny. 509 Public Bill CommitteeHOUSE OF COMMONS Finance Bill 510

On the issue of how the amount of payment is Amendment 37, in schedule 28, page 536, line 15, calculated, it is important for taxpayers and advisers to leave out engage with HMRC, as I said earlier. HMRC will open “resulting from the same tax arrangements” an inquiry or raise an assessment that will usually and insert “and the chosen arrangements;”. provide a clear picture of the amount in dispute, and taxpayers should ensure HMRC knows about any other Amendment 38, in schedule 28, page 536, line 21, relief or allowance that will affect the tax in dispute. It is after “it” insert “and the chosen arrangements”.— important to emphasise that that is the tax that the (Mr Gauke.) taxpayer will have to pay if their scheme fails, and no Schedule 28, as amended, agreed to. more. Taxpayers will have 90 days to discuss the calculation and make representations to HMRC if they think the amount is wrong. Clause 222 I took one or two interventions on the issue of DEFINED TERMS USED IN CHAPTER 3 whether DOTAS disclosures are on the safe side. If disclosures are made but there is no additional tax, Amendment made: 35, in clause 222, page 151, leave there will not be an accelerated payment. HMRC will out line 18.—(Mr Gauke.) publish a list of scheme reference numbers before Royal Clause 222, as amended, ordered to stand part of the Assent to tell taxpayers which schemes will get a payment Bill. notice and which will not. Clauses 223 to 226 ordered to stand part of the Bill. On the issue of ensuring the DOTAS rules work Schedule 29 agreed to. effectively, DOTAS has been in place for 10 years and has been revised at various times. We believe that now is the right time to look at its hallmarks to see whether Clause 227 they still work properly or whether they need updating. We also want to look at how compliance can be updated. MEANING OF “RELEVANT PROPOSAL” AND “RELEVANT We will publish a consultation in the summer, and ARRANGEMENTS” HMRC will publish guidance around the time of Royal Assent. It will shortly publish draft guidance in consultation Charlie Elphicke: I beg to move amendment 53, in with professional bodies and other interested parties. clause 227, page 154, line 34, at end insert— On the issue of why the penalty timing is not the ‘(5) “Tax abuse” means any arrangement that, having regard to same as for self-assessment, it is important to emphasise all the circumstances, it would be reasonable to conclude is an that the penalty is for late payment and not for an arrangement that has no business, social or other purpose other incorrect return, as in the case of self-assessment. We than the obtaining of a tax advantage.’ have set it in line with other late payment penalties already in the system, rather than penalties for an The Chair: With this it will be convenient to discuss incorrect SA return. If a follower notice is ignored, a the following: follower notice may be withdrawn following representations. Amendment 54, in clause 228, page 155, line 35, at If that happens, the payment notice is also withdrawn. end insert— If DOTAS was also relevant, the payment notice can still stand. ‘(8) It shall be a summary offence to promote a relevant proposal or relevant arrangement which meets the definition of I hope I have addressed the questions and queries “tax abuse”. raised by the Committee. I am grateful for the level of (9) A promoter found guilty of an offence under subsection (8) scrutiny the measures have received today. I hope that shall be liable to a fine not exceeding level 1 on the standard they can stand part of the Bill, and I hope I have said scale.’ enough to persuade the hon. Member for Erith and Clause stand part. Thamesmead not to press her amendment. Clauses 228 to 230 stand part. Amendment 32 agreed to. That schedule 30 be the Thirtieth schedule to the Bill. Amendments made: 33, in clause 212, page 141, Clauses 231 to 241 stand part. line 9, leave out Government amendment 39. “resulting from the same tax arrangements” Clauses 242 and 243 stand part. and insert “and the chosen arrangements;” Government amendments 40 to 43. Amendment 34, in clause 212, page 141, line 13, after “it”insert “and the chosen arrangements”—(Mr Gauke.) Clauses 244 to 250 stand part. Government amendments 44 to 46. Clause 212, as amended, ordered to stand part of the Bill. Clauses 251 to 265 stand part. Clauses 213 to 221 ordered to stand part of the Bill. Government amendment 47. Clauses 266 and 267 stand part. Government amendment 50. Schedule 28 That schedule 31 be the Thirty-first schedule to the Bill.

ACCELERATED PAYMENTS AND PARTNERSHIPS Clauses 268 and 269 stand part. Amendments made: 36, in schedule 28, page 536, line 6, Government amendment 48. leave out “tax” Clauses 270 and 271 stand part. 511 Public Bill Committee17 JUNE 2014 Finance Bill 512

Government amendment 49. the penalty was just a £200 fine, as opposed to life Clauses 272 to 274 stand part. imprisonment, it would be career-defining for anyone engaged in the legal or accountancy professions or Government amendment 51. similar, allied professions. That is an important social That schedule 32 be the Thirty-second schedule to message to send. the Bill. The definition of “tax abuse” in my amendment builds Clauses 275 and 276 stand part. on the definition of “tax advantage” in clause 227(3) and would include Charlie Elphicke rose— “any arrangement that, having regard to all the circumstances, it would be reasonable to conclude is an arrangement that has no 2.39 pm business, social or other purpose other than the obtaining of a tax advantage.” Sitting suspended for Divisions in the House. One could loosely say that that is almost a codification of the principle of Furniss v. Dawson. We are talking 3.4 pm about a transaction that has no purpose other than On resuming— gaining a tax advantage—it would not have been entered into but for that—and taking money off the Revenue, Charlie Elphicke: I rise to speak to amendments 53 thereby ensuring that the Revenue has less money and and 54. It is worth noting that the Government have the rest of us have to pay more. taken substantial action to counter the kind of egregious tax avoidance and aggressive tax planning that this Richard Fuller: My hon. Friend is much more learned country has seen for too long. The general anti-avoidance in these areas than me and I am enjoying listening to rule, the measures and promoters and the strong anti- him. Just for my understanding, would a tax deduction avoidance tactics by HMRC, which has raised so much for my pension fit the criteria for a tax abuse or not? If money, have ensured that the law and the protection of not, will he explain why not? the Revenue are strongly on the side of hard-working people who pay their taxes and do the right thing. These Charlie Elphicke: It would not, because saving, including probing amendments were tabled to hammer home the saving for retirement, has a wider social purpose. This is social acceptability message and to say to the tax avoidance about transactions that would not otherwise have been industry that what it is doing—promoting schemes that entered into. will be struck down in due course by HMRC—is not just illegal, but goes a step beyond that and is so antisocial and socially unacceptable that it should be a Richard Fuller rose— criminal offence. I hasten to add that it should not be a serious criminal offence, but a summary justice criminal Charlie Elphicke: Before I take an intervention from offence, with a level 1 fine. It is the fact of the crime that my hon. Friend, let me explain further and elucidate the is so important. The proposed measure is targeted not principle I am defining. at the beneficiaries of tax avoidance schemes, but at Let us consider tax abuse and egregious tax avoidance those who promote them. done by companies such as Ingenious Media. Ingenious Let me dispose of one case put against this provision. Media has an £8 billion film investment plan and attracted Someone said to me, “This would apply to someone wealthy customers and investors. It was told by HMRC selling an ISA. That would be made a criminal offence.” that its schemes were designed to avoid tax rather than That was put to me in a parody account on Twitter. to promote films. Wealthy investors in Mr McKenna’s [Interruption.] Not my own parody account, I hasten schemes—he runs the company—won tax relief of to add. My answer is simple. The construction of the £1.35 billion, with some individuals, such as Wayne amendments is built on clauses 227 and 228, which deal Rooney, Lord Hollick and “Newsnight” presenter Jeremy with “relevant proposals” and “relevant arrangements” Paxman, investing tens of millions of pounds. They all that are promoted by promoters. benefited. Would that amount to tax abuse? I would say that it does not fall within my definition of tax abuse, Richard Fuller: I am sorry to drag my hon. Friend because one could say there was a wider social purpose back to his point about making this a criminal offence, for investing in and financing films. albeit not a serious one, but he also said he wanted to send a message. Which message is he sending: that it is a Richard Fuller: I am concerned about phrases such as criminal offence or that it is not serious? “in my opinion” and “one could argue that” if one is writing legislation. Do they not open up a tremendously Charlie Elphicke: Every criminal offence is serious; I uncertain field for people who might quite legitimately am talking about the severity of the penalty. Am I be looking to do certain things that my hon. Friend may saying that a person promoting a scheme that is so believe has a social purpose, but which other people egregious in its avoidance that it is a tax abuse should be may not? I see the intent, which some of us may wish to sent to prison for life? No; I am saying that the penalty applaud, but the somewhat arbitrary way in which he is would be set at a low level and that the message sent by going about it might give cause for concern to many. the fact of the criminal offence is one of social unacceptability. That is an important message, because Charlie Elphicke: My hon. Friend is constantly cautious people promoting such schemes are professionals and about any measure that takes the battle to tax avoidance, professionals will not go into an area where they know and I respect that. I would say the proposed wording is that the criminal law will hunt them down. Even if not arbitrary, because the question is whether there is a 513 Public Bill CommitteeHOUSE OF COMMONS Finance Bill 514

[Charlie Elphicke] much more complicated offence to prove. What I am defining is a much simpler test, which is: is there any wider business or social purpose. Can we say that there purpose to a transaction for the promoter to be promoting is a wider business or social purpose to film finance? it; or does it have no business purpose and no social Probably yes. Someone might have entered into a purpose, but is simply about obtaining a tax advantage? transaction to finance a film for wider reasons than This is about clearly sending a message to those engaged simply avoiding tax, particularly as the Government in promoting such schemes. It is specifically aimed at were promoting that. the promoters of the schemes, rather than the beneficiaries. It is a similar case with Ingenious schemes such as Tamar Films LLP, in which one John Mills was an investor. In my judgment, the offence is not aimed at 3.15 pm those schemes, although they amount to aggressive tax Matthew Jenner of No Tax Advisors devised a scheme avoidance. The kind of behaviour engaged in by Ingenious called “Working Wheels”, in which Chris Moyles was Media is entirely wrong and amounts, invariably, to famously involved, and there are others. The purpose of aggressive tax planning. The transactions I am particularly that scheme was simple: to claim to have run up losses interested in targeting with my amendment are other of £1 million selling £3,731 of used cars. It was not a schemes, which are without any social purpose whatever. used car business; it was a tax scheme that had one Let me give my hon. Friend the Member for Bedford purpose only, which was the avoidance of taxation. some examples. There was no wider business or social purpose. Chris Neil Masters of Mercury Tax promoted a £1 billion Moyles tried to offset the £1 million loss in a year in scheme called Liberty, which was one of the largest and which he had other income, including an estimated most aggressive avoidance schemes available. By buying £700,000 salary from the BBC. The Revenue took that and selling dividends offshore, it generated more than case on and he lost, but the point is whether such £1 billion in artificial losses, which members could schemes should be promoted in the first place. offset against their tax bills. A Liberty member paying Jenner cooked up the NT Advisors’ Cup Trust scheme, £70,000 in fees could earn £1 million a year tax-free. which in my view is the most abusive scheme of all. It is The scheme was open only to higher rate taxpayers, outrageous and a complete abuse of the charity regime. who would normally pay income tax of between 40% I will briefly read the report on that scheme in The and 50%. That was an entirely circular scheme. No one Times on 31 January 2013: would ever invest in the scheme; it had no business or social purpose whatever. There was one purpose and “One of Britain’s biggest charities is a front for tax avoidance, The Times can reveal. Wealthy donors used the Cup Trust to one purpose alone: obtaining a tax advantage and avoid £46 million in tax in an extensive abuse of Gift Aid avoiding tax. The definition of my proposed offence of incentives designed to encourage charitable donations. The registered “tax abuse” is aimed at such schemes. charity raised £176 million over the two years 2010 and 2011. In 2010 it attracted more donations than the Royal Society for the Chris Heaton-Harris (Daventry) (Con): I wonder what Protection of Birds, the British Heart Foundation or the Salvation the result of HMRC’s investigation into the Liberty Army. But instead of using the money for its stated objective, to scheme is. ‘improve the lives of young children and adults’, it carried out trades that artificially generated Gift Aid for donors to reduce Charlie Elphicke: The scheme was revealed by The their tax bills. Investors who ‘donated’ £1 million to the Cup Times, and my understanding is that HMRC’s investigations Trust, for example, would receive most of their money back—but are still ongoing, although I stand to be corrected by the still be entitled to claim Gift Aid worth between £250,000 and £375,000.” Minister. That was a completely and utterly shameless abuse of Chris Heaton-Harris: Does that mean that HMRC our charitable gift aid system. Many were critical of the already has the power to shut down such schemes? How Chancellor when he quite rightly brought forward legislation is my hon. Friend’s proposal complementary to said to tackle the abuse of charity law in that way. He was scheme? quite right to introduce measures to safeguard the public revenue. The promoters should not have promoted an Charlie Elphicke: I guess the question is: at what entirely shameless, abusive avoidance scheme such as point do we close the gate? Do we close the gate after that in the first place. the horse has bolted and we have to spend lots of My key point is that such transactions have no wider money bringing it back into the pen; or do we keep the or social purpose whatever, other than the avoidance of gate closed in the first place and locked securely? It is taxation. There are other companies and accountancy better to lock the gate before the horse bolts. That is the firms that introduce their wealthy clients to those people. intent behind my suggestion and probing amendment. There is an extensive industry of barristers who give opinions on the matter and are engaged in the promotion Ian Swales (Redcar) (LD): In the case that the hon. of such schemes. It is time we said, “Enough is enough.” Gentleman has just described, he used the expression That kind of activity and behaviour has no social “tax avoidance”, on the grounds that it is legal until utility. Gaming the tax system is wrong. For example, if proved otherwise. Does he not agree that a scheme that someone earning £10 million a year pays no tax, a is structured in that way, with circular transactions and whole load of our constituents—an entire constituency no perceived use other than avoiding tax, is in fact tax in some cases—will have to pay more tax as a result. evasion and therefore criminal? The sense of fairness and justice in getting the balance Charlie Elphicke: That is an important question. The right, so that there is a balance in our tax system—that offence of cheating Her Majesty’s Revenue requires tax falls evenly and fairly, and contributions are made proof of dishonesty. It is an indictable offence and a according to the rules set up—is the fundamental reason 515 Public Bill Committee17 JUNE 2014 Finance Bill 516 why this is an important amendment. It is only a Ian Swales: The hon. Lady makes a good point. Some probing amendment, but I am moving it to make of the representations I have received are about things a serious and grave point. We need to send a social that happened five or more years ago. I was self-employed message that such behaviour—this kind of industry and at the time and potentially affected by IR35. My answer gaming of the system—is unacceptable and beyond was simple: I paid my tax each year. The hon. Lady the pale. makes a good point about celebrities and others. Those who are tempted to engage in these sorts of activities need to bear in mind reputational risk as well as many Ian Swales: It is a pleasure to serve under your other things. According to a recent article in The Times, chairmanship, Mr Caton. I will not detain the Committee people are engaging less in these activities. One of my long. I would like to back up the points made by the e-mails in the last few hours has been from somebody hon. Member for Dover. who is about to lose their job in a tax avoidance company. I am a member of the Public Accounts Committee That leads me to the thrust of clause 277 onwards, and we have had not only Google, Amazon and Starbucks which is about the whole issue of the promoters of tax come before us, but the big four accountancy firms, who avoidance vehicles—again, I am talking about the aggressive have told us about their tax avoidance businesses. They ones, not about paying a bit extra into a pension or put forward schemes where they have anything upwards whatever. These are the people who create structures from a 50% chance of success. At only 50%, they will and promote them, usually to relatively naive users. recommend that an individual might follow such a There must be a question mark over this area. If people scheme. As the hon. Gentleman pointed out, what they were selling financial services products that were as are promoting is a bit of a bet on red or black. sophisticated as some of these products, there would Even more interesting was our session with the people probably be legislation on the need for independent whose job it was to promote tax avoidance schemes. financial advice. Should the people selling such schemes One of my abiding memories of being on the Public be allowed to sell them directly to possibly naive users? Accounts Committee was asking one of those people, Some of the celebrities and others who found themselves “So, how many of the schemes that you have promoted on the other end of these things were engaged more in over the last five or seven years are now illegal?” He just writing pop songs or playing them on the radio than in smiled and said, “All of them.” That is a good point as going into the details of their own financial affairs. We far as HMRC was concerned, but he was happily selling ought to look at rights of redress against promoters of these schemes, possibly even in the knowledge that they tax avoidance schemes. As I indicated earlier, we should would end up as illegal. That has to be seen as pretty see more prosecutions, people being struck off and a lot shady business. more naming and shaming, not just of those who During my accountancy training, I learned that there benefit from tax avoidance, but of the promoters. We were only two things: avoidance and evasion. We now should look not just at the small operators such as those have this new expression, “aggressive tax avoidance”. we saw on the Public Accounts Committee. We also As I indicated in my intervention on the hon. Gentleman, need to expose the banks and large accountancy firms I sometimes query whether aggressive tax avoidance that, in terms of volume, are often the main sellers of should be in the realms of evasion and therefore a that sort of scheme. I welcome the fact that Barclays criminal activity. When we talk about companies that and other banks are reducing their wealth management have been set up purely to avoid tax—I am talking divisions, because tax avoidance is often one of the about bogus transactions, money moving on and offshore, main activities in wealth management. I think Barclays circular transactions designed to manufacture huge tax has closed its entire wealth management division, although losses, and so on—surely we are talking about evasion. I stand to be corrected on that. If people went into such rigmaroles to claim from the We are moving in the right direction. I welcome benefits system, they would be in jail as fast as the clauses 227 onwards and hope that the Minister will be courts could catch up with them. even more forceful in dealing with the promoters of I feel that the public pound is the public pound. We such schemes, which are designed to steal money from need to start thinking about that when we talk about the public purse. tax as well as about benefits and spending. As the hon. Gentleman pointed out, this is not a victimless crime. Chris Heaton-Harris: It is a pleasure to serve under We all have to pay more or our public services are your chairmanship, Mr Caton, possibly for the last impoverished, so celebrities and other wealthy people time, though as I have a lot to say, maybe not. I was not who feel that they are engaged in some kind of sport going to talk about the amendments until I heard them need to remember that there is somebody on the other introduced by my hon. Friend the Member for Dover. end of their tax avoidance. The Public Accounts Committee, on which I sit with my hon. Friend the Member for Redcar, reported on several Sheila Gilmore (Edinburgh East) (Lab): Does the cases mentioned by my hon. Friend the Member for hon. Gentleman also have a view on whether tighter Dover. We had a whole session on the Cup Trust and provisions such as these would prevent some people how HMRC eventually found out about it, clamped from being sucked into such schemes? I am not necessarily down on it and shut it. At the end of the day, that was talking about celebrities trying to be clever; there might probably more of a problem for the Charity Commission be others who were told that a scheme would work for than it was for HMRC. them—and who would no doubt pay somebody for I wanted to talk about aggressive tax avoidance and it—but are likely to lose money. If they never got into it tax avoidance in general. As far back in history as I can in the first place, they would not be complaining about remember, as long as there have been taxes, there have any back tax or whatever. been people who have tried to avoid paying them. That 517 Public Bill CommitteeHOUSE OF COMMONS Finance Bill 518

[Chris Heaton-Harris] David Rutley (Macclesfield) (Con): My hon. Friend is making a very important point. Will he remind the is because it is essentially the state taking away some of Committee which Government is in power in France? a person’s earnings. The core of the problem is that people avoid tax because tax is too high to pay legitimately. Chris Heaton-Harris: Well, it is fairly obviously a If someone has enough money they will try to find a French Government—[Interruption.] Yes,Ihavetosay way around paying that. The element missing from our that it is a socialist Government as well, but again, I was discussion is that taxes are too high in this country. trying to depoliticise the issue. I am trying to make the point that if people could have an argument without Sheila Gilmore: If the hon. Gentleman’s argument politics on the amount paid, they would aim for the were correct, when taxes fall, as the Conservative party most revenue that they could get in to the Exchequer. favours, we should surely see avoidance eliminated. It is Therefore, if that was done, plenty of arguments could important for people to pay for the services they want be made for how that could be spent, and we could have for their country. That might be defence, social services the political debate about the spending of that money. or all sorts of things. We should encourage people to feel positive and not negative about that. The Chair: Order. Mr Heaton-Harris, can I implore you to get on to the subject of tax avoidance, rather than taxation philosophy? Chris Heaton-Harris: I appreciate the hon. Lady’s comments on my argument without having heard it. I completely understand why we pay taxes. I am an Chris Heaton-Harris: I could not believe that I strayed unhappy taxpayer and always have been since I started from it—I am very apologetic. The simple point is that earning. I hope I always will be an unhappy taxpayer. I if we manage to get the tax rate at exactly the right level, demand value for money, which is why I am happy to sit where we are getting the most revenue in, we will be able on the Public Accounts Committee to try to drive better to make the social arguments whereby people will feel value for money. Equally, there is an argument for a tax even more deeply uncomfortable about making bogus system without politics. Art Laffer was a lecturer on my transactions and circular transactions. That relates to masters degree, so it can be guessed what is coming all the work that has been done on the Public Accounts next. Committee on making companies pay what the PAC If we could depoliticise the argument, there is an Chair would say is their fair tax. The simple point is ideal level of tax out there that brings in the most that I understand what my hon. Friend the Member for revenue. Surely those on the other side of the argument—the Dover is trying to do, but the best way of cutting down Opposition—would want to see the highest amount of on tax abuse is to reduce taxes in the first place. tax revenue coming in to pay for public services of the highest level they require. It is obvious that if someone Shabana Mahmood: The clauses in the group also fall is taxed at 100%, there is no point in earning, so the under the stream of Government consultations called, state receives no revenue. If someone is taxed at 0%, the “Raising the stakes on tax avoidance”, which we discussed state does not get any revenue, so the Government this morning and earlier this afternoon. The clauses on cannot function, and somewhere in the odd-shaped follower notices and accelerated payments, which we curve that Art Laffer drew a couple of decades ago is have just debated, are also part of the strategy. It is the ideal point, where at a certain level of tax, the most worth bearing in mind that a further measure has been revenue is got in. Surely that is the sort of place we proposed to give HMRC the power to directly collect should be aiming for in our aspiration for the tax debts from individuals’ bank accounts. It is not, however, system. part of the Bill. It is currently subject to a consultation and has been subject to a great deal of media scrutiny 3.30 pm already, as have the measures before us. The aim of the clauses is to identify those promoters Charlie Elphicke: I would like to reinforce my hon. of tax avoidance schemes whose behaviour is deemed to Friend’s outstanding argument. Many Government be high risk. Once identified, they will be issued with a Members are strong advocates of lower, simpler, flatter conduct notice to encourage improved behaviour, but if taxes, and indeed, not so long ago, I made the case for a compliance is not forthcoming in a prescribed period, a flat corporation tax in the UK of just 10%, which we monitoring notice may be issued under the authority of could get by axing all the reliefs that exist in business the first-tier tribunal. That will lead to further sanctions taxation and by having a very simple flat tax system that for the promoter, including publication of that status by makes us more internationally competitive. I urge him HMRC, as well as additional information and compliance to continue expanding his argument. burdens. According to the recent guidance, HMRC expects monitoring notices to be issued in only a small Chris Heaton-Harris: It is not a surprise to many number of cases. Government Members that the fifth-largest French city In more detail, clauses 227 to 229 deal with the is now London, because so many French people have definitions that will be applied to the terms “promoter”, come over to live here. With a 75% higher rate of tax, “intermediary” and so on. Clauses 230 to 234 and the best thing they can do is skip across the channel and schedule 30 relate specifically to conduct notices. The not pay tax in France. The revenues being received by clauses introduce the concept of a conduct notice, which the French Exchequer at this time are collapsing because may be issued if a promoter has triggered a threshold the people who pay the most tax do not reside or pay condition in the previous three years. HMRC expects tax in France any more. that, in most circumstances, there will be discussions 519 Public Bill Committee17 JUNE 2014 Finance Bill 520 with a promoter that has met a threshold condition Clauses 254 to 259 give additional powers to enable with the aim of understanding why it happened, and an authorised HMRC officer to request information or reaching an agreement on appropriate standards for the documents that had not been provided in previous future. HMRC will aim to develop a working relationship notices or where the officer suspects that the promoter with promoters that it hopes will lead to issues being has withheld particular information or documents. There resolved informally and without the need for the issue is a right of appeal by the promoter against these of a conduct notice. information notices. Clauses 260 to 266 set out the form and manner in which requests for information are to be Insignificant breaches of certain threshold conditions made and provide some exemptions on producing certain may be ignored, but certain threshold conditions would documents. always lead to a conduct notice—for example, receiving a conduct notice as a dishonest tax agent—unless HMRC Clauses 267 to 273 and schedule 31 set out the deems a notice inappropriate due to the minimal impact penalties that may be levied for non-compliance with on the level of collection of tax. For example, if the various aspects of the new rules. They can be promoter fails to disclose a notifiable proposal under substantial—up to about £1 million. The clauses also DOTAS, and if that is significant but there are no users introduce a higher standard of reasonable excuse for of the proposal, it would not be appropriate to issue failing to comply with the new regulations. In particular, a conduct notice. In contrast, if the promoter omits an individual cannot rely on legal advice provided to 300 clients from a DOTAS client list, that will probably them by a monitored promoter to claim that they have have a significant impact on the collection of tax and so taken reasonable care with their tax affairs, which could would be included. otherwise be used as an argument to mitigate a penalty. Clauses 274 to 276 provide supplemental, technical The clauses set out what needs to be contained in a provisions, including the introduction of schedule 32, conduct notice, such as the conditions that the recipient which extend the rules to partnerships. must comply with, and also gives a recipient the opportunity to comment on the proposed terms. Significantly, however, We support the motives behind the new regulations. there is no right of appeal, and points have already been However, it would be useful to have some clarity on made in relation to that. The clauses allow an authorised precisely what types of tax avoidance the Government HMRC officer to withdraw the notice if there is evidence are prepared to allow to continue. I say that because, that the underlying reason for it has been addressed. according to HMRC guidance: Finally, the clauses set the maximum length for a conduct “The regime involves a graduated series of sanctions, which notice at two years. carefully balances the rights of promoters against the need to prevent and defeat tax avoidance.” Clauses 235 to 242 contain the procedures for monitoring Given our discussion and, in particular, the thrust of notices. Where a promoter fails to comply with a conduct the amendments tabled by the hon. Member for Dover, notice, an authorised HMRC officer must apply to a my reading of that guidance is an apparent acceptance tribunal to approve a monitoring notice. Only a tribunal that the industry exists. It would therefore be helpful to may issue a monitoring notice and may refuse to do so. know where the Minister draws the line on tax avoidance. The promoter must be made aware of the application to Which behaviours would he deem to be acceptable, and the tribunal. The monitoring notice will state the reasons which must be stopped? The HMRC guidance talks for its issue and, in particular, the condition in the about a balancing of rights, not the elimination of conduct notice that the promoter has breached. One rights or of a particular type of activity.Further clarification effect of a monitoring notice is that the promoter may on that would be helpful, especially as the use of aggressive be subject to specific information notices with penalties tax avoidance schemes is almost exclusively the preserve for non-compliance. The Bill will allow the promoter to of wealthy individuals and corporates. make a case to the tribunal that a monitoring notice is not appropriate—for example, because the original What consideration has the Minister given to the condition in the conduct notice was unreasonable—and argument that it is time for promoters of tax avoidance the tribunal may amend the proposed monitoring notice schemes to face the same fines as their clients when their if it so wishes. The proposed law also allows HMRC to schemes fail? All too often, promoters have already publish details of promoters subject to a monitoring pocketed substantial fees from their attempts to deprive notice, including the conditions in the conduct notice the public purse of much needed revenue. Perhaps more that were breached. The promoter must inform its is needed to persuade them to pursue a career that, to clients that it is being monitored, and regulations may coin the phrase used by the hon. Member for Dover, is be added to require the promoter to include the fact of “more societal value”. What is the Government’s that it is being monitored in marketing literature and on view on taking such measures forward to what may be the web. considered natural conclusions, such as penalties and other sanctions, that go beyond mere notices? Clauses 243 to 246 refer to promoter reference numbers. Broadly speaking, the Minister will be well aware that Once a monitoring notice takes effect, HMRC will issue the reaction from the accountancy firms and professional a promoter reference number to the relevant promoter bodies to the initial consultation on high-risk promoters who, in turn, will be required to pass on that number to was negative, but that adverse reaction appears to have all its clients. That will enable HMRC to direct its softened somewhat, as HMRC has now addressed some compliance efforts towards those particular clients. of the issues raised in the consultation process. However, Clauses 247 to 253 relate to information powers. The concerns remain over particular clauses and a wider clauses give HMRC wide-ranging powers to request question is being raised about HMRC going to the information from monitored promoters on arrangements trouble of getting the new clauses introduced to act and proposals that they set up once a monitoring notice against what appears to be a small number of promoters. has been given. In doing so, the professional bodies are concerned—we 521 Public Bill CommitteeHOUSE OF COMMONS Finance Bill 522

[Shabana Mahmood] could guard against that opportunity for promoters to cause further and unacceptable delay. might think that they would say this—that the clauses Much comment was made during the consultation might catch legitimate activity. It would therefore be process that tax avoidance grows as the complexity of useful to hear what activity the Minister considers to be tax law increases. Members of previous Finance Bill legitimate. Committees, who have dealt with Finance Bills much We know that about 20 businesses are potentially longer than the one we have been scrutinising over the high-risk promoters that HMRC wants to target. It past few weeks, will attest that, even with an Office of would be helpful to have the Minister’s explanation of Tax Simplification, the tax law that we pass feels like an what consideration was given to its existing powers and ever-growing beast. Will the Minister provide an update whether they were sufficient to deal with those promoters. on the Government’s view on simplification of the tax Each promoter will approach its work differently and code? What more are they planning? Do the Government have different levels of risk in its proposals. We could recognise that there is an interplay between greater argue that, rather than a generic definition for all, complexity of tax law and the way in which further which might catch people that the Government do not avoidance activity appears to spring up like a many-headed intend, a more targeted approach using existing rules hydra? might be better. It would be helpful for the Minister to What steps will the Government take to ensure that a tell us how he has come to a different conclusion. The firm clampdown on promoters will not simply drive Committee needs to be satisfied that the action we are their activities below the HMRC radar or offshore, taking will catch all those whom it is intended to catch. where they will be even harder to regulate? Has any assessment been made of that risk and is there more 3.45 pm that can be done to try to prevent that? Similarly, does Ian Swales: The shadow Minister has clearly done her the Minister share the concern of the Chartered Institute homework. Has she considered the definition question? of Taxation that some high-risk promoters could wear There was a high profile case where a hedge fund the naming and shaming that is envisaged as a result of manager had nearly £19 million of tax losses through a these measures as a badge of honour, or worse, as scheme that the press said was marketed by a film approval by HMRC that they provide schemes that company, Goldcrest, but then sold by HSBC, so presumably work, and that he is therefore potentially providing a in the legislation the promoter would be the film company valuable marketing tool for the most unscrupulous and the intermediary would be HSBC. But when we individuals? It would be helpful to know what assessments look at the levels of financial sophistication of those have been made to measure that risk. two companies, we would have to question who was I return to a question on resourcing, which has been a really the promoter of such a scheme. theme of all our debates today. HMRC is getting more powers and therefore its resources are brought under Shabana Mahmood: I am grateful to the hon. Gentleman; sharper scrutiny. Given the wide-ranging information he makes an important point. Again, it will be helpful powers in the legislation, is there a risk that HMRC to hear from the Minister how the definition will play might be inundated with a huge volume of material, to out in practice. We know who the 20 high-risk promoters the extent that they cannot cope, especially as the are. Any of us who go on the internet to look into such information in these measures is not limited to just matters will quickly work out who those companies are. DOTAS cases, let alone to just avoidance cases? HMRC We know who we are trying to get to as a result of these will presumably need to allocate more resources to measures. There is a question about whether those are dealing with this information. Has any analysis been the only promoters that the Government are seeking to done comparing the costs of using the current rules to catch as a result of the measures or whether there is an go after the 20 known high-risk promoters as a targeted intention to go further. If we are going further, that is a approach, with that of the wider measures? What is the perfectly reasonable route to take, given some of the required resource for the approach that has been adopted examples of tax avoidance that have made it into the as a result of the legislation? public domain and into public discourse. In going down The hon. Members for Dover, for Redcar and for that road, it would be helpful to know how the Daventry are right to point out that tax avoidance has Government’s approach will be shaped and what more been greatly discussed by ordinary members of the might be needed as the proposals and measures bed in. public. It comes up as a doorstep issue, especially given There is no right of appeal to the issue of a conduct that some of the cases of the most aggressive tax notice. As I mentioned earlier, we have already had avoidance adopted by people who are described as some debate about other measures in this section of the celebrities have filtered through the public consciousness Bill that do not attract a right of appeal. I simply and elevated the debate, making it a higher political reiterate the points I made earlier that rights of appeal priority. Given the financial circumstances of the country, are an important feature of our legal system. If we are it is ever more important that we ensure that we collect going to derogate from them and remove them, as all the tax that is due in a timely way. The Government legislators we must be sure that there is no other way of are right, therefore, to focus on what happens when tax crafting a right of appeal to guard against the opportunity, avoidance occurs and who the people that engage in this in this example, for some promoters unacceptably to behaviour are. A necessary aspect of that debate is to delay the effectiveness of the high-risk promoters provisions think about sanctions and penalty regimes for promoters by making multiple appeals. Perhaps the Minister will and people who engage in that activity. However, that address that point and satisfy the Committee that, in would lead to a wider system of regulation to make the removing the right of appeal, he was sure that there was whole system work, which raises further important no way of phrasing or crafting a right of appeal that questions about the way in which the professions operate. 523 Public Bill Committee17 JUNE 2014 Finance Bill 524

I know that the House of Lords Economic Affairs tax offence—clauses 230 and 231 allow HMRC to issue Committee has looked at those questions a number of the promoter with a conduct notice that requires them times. They are issues that we continue to receive to change their behaviour. The conduct notice can cover representations on, as I am sure the Minister does. They the avoidance schemes that the promoter sells, the way are important points to be considered, given where we they treat their customers and their compliance with are with the public debate. their tax obligations, and it can last for up to two years. HMRC has the power to check whether the promoter is complying with the conduct notice. Mr Gauke: It is a great pleasure to respond to this If at any time during that period the promoter breaches debate this afternoon. We have had an extensive debate the terms of the conduct notice, the second stage is about avoidance in connection with previous measures triggered. Clause 235 gives HMRC the power to apply and I welcome the discussions on tax avoidance both in to the tribunal for approval to issue a monitoring notice, Committee and across the country. I am sure that the which allows it to use information powers against the Government’s track record, in their drive to tackle tax promoter to get full details of their schemes and clients. avoidance, speaks for itself. Once a monitoring notice has full effect, clause 241 The measure’s origin can be found in our consultation allows HMRC to name the promoter as subject to a “Lifting the Lid on Tax Avoidance Schemes” from the monitoring notice, and clause 242 requires the promoter summer of 2012 when the activities of these promoters to tell their intermediaries and customers. Failure to were brought into sharp focus. Quite rightly, there was comply with those obligations can lead to penalties outrage that someone could be running a business, the of up to £1 million. The penalties are described in sole aim of which was to help and encourage people, schedule 31. often in large numbers, to avoid paying tax. As with Clauses 248, 251 and 253 extend the information other proposals, the professional bodies and business powers and penalties for intermediaries who continue groups want us to take action and I am grateful to them to act for the monitored promoter. It is not only the for engaging with us to refine some of the detail during promoters and intermediaries but their clients who get the recent consultations. The measure is about tackling new responsibilities under the legislation. Clause 246 promoters who set up and market tax avoidance schemes requires clients to tell HMRC that they have used the and then refuse to engage with HMRC to sort out the monitored promoter, and clause 270 introduces an extended consequences. 20-year time limit for HMRC to bring assessments on My hon. Friend the Member for Dover has tabled them if they fail to do so. There will be a higher amendments to these clauses and I will come to those standard for reasonable excuse and reasonable care for shortly. First, however, there are also amendments in promoters and their clients, which will prevent promoters this group in my name. Before I turn to the amendments, from hiding behind poor quality legal advice as a I will give some background to explain why the measure justification for their behaviour. was proposed and how it will operate. Schedule 31(9) prevents clients of high-risk promoters Clauses 227 to 276 and schedules 30 to 32, which from relying on legal advice provided to them by the introduce the high-risk promoters rules, are part of the promoter to avoid penalties. Those clients are required Government’s strategic response to avoidance and are to seek independent legal advice on their rights and intended to deter the use of avoidance schemes by obligations. To encourage better communication with influencing the behaviour of promoters, intermediaries HMRC, intermediaries and clients can also rely on and clients. The Government are committed to tackling clause 266, which overrides confidentiality agreements the unacceptable behaviour of promoters of avoidance with the promoter and allows them to talk to HMRC schemes. A small but persistent minority of promoters voluntarily about any of the monitored promoter’s schemes. sell avoidance schemes that patently do not work and Finally, schedule 32 describes how the legislation applies waste their clients’ time and resources. Some avoid their to high-risk promoters who are partners in partnerships, obligation to disclose the schemes to HMRC and seek and how the behaviour of a partner may have consequences deliberately not to co-operate with HMRC in trying to for the partnership. resolve their clients’ tax affairs. The measure began with a consultation in 2012, The new measure will change the playing field by which was followed by a consultation a year later, imposing minimum standards of behaviour, supported “Raising the stakes on tax avoidance”, which made by onerous information powers and stiff penalties if proposals for the structure of the regime. More than promoters do not comply. It is designed to change the 30 responses to “Raising the stakes” were received, behaviour of the promoters who behave unacceptably, most of which were supportive of the policy, with many and encourage them back into compliant behaviour. suggesting ways in which the regime could be improved. Let me set out in a bit more detail the changes that The consultation on the draft legislation earlier this the clauses will make. There are two stages to the year generated over 20 responses and was used to refine legislation. First, clauses 227 to 235 and schedule 30 it. Again, I thank those who responded to the consultation give the promoter the chance to change their behaviour and commented on the draft legislation. before the serious consequences in the second stage apply. Secondly, clauses 236 onwards and schedule 31 4pm allow HMRC to use significant new information powers These measures will impact most heavily on a small on the promoter, with penalties of up to £1 million for number of the highest-risk promoters whose behaviour failing to comply. The legislation identifies promoters is designed to disrupt and frustrate HMRC in its vital by using objective threshold conditions, which are described role of tackling avoidance. It is right that we take steps in schedule 30. If the promoter triggers a threshold to tackle that behaviour and I am grateful to the wider condition—for example, by being charged with a criminal promoter community for their support. 525 Public Bill CommitteeHOUSE OF COMMONS Finance Bill 526

I hope that by now those who engage in tax avoidance of the taxpayer or promoter of a scheme is extremely have got the message: the Government have introduced complex, and relatively simple rules can be exploited by a general anti-abuse rule, closed down loopholes and such behaviour. taken action to get the tax in disputed avoidance schemes The relationship between avoidance and complexity paid up front. These measures are the next step in is in itself quite complicated and runs in different building up pressure on those who market and those directions. Often, the simplest approach is for a taxpayer who use tax avoidance schemes. The promoters and to pay the tax that is due without any artificial and avoiders should be under no illusion that we will stop contrived behaviour, but we live in a world where some there—as long as they continue to try to frustrate the will engage in such behaviour. As a consequence, we tax system and try to pay less tax than the law clearly sometimes have to ensure that HMRC has proper powers intends, we will continue to act against them. and sometimes, unfortunately, we need additional Before turning to the amendments tabled by my hon. complexity in the tax system to deal with such contrived Friend the Member for Dover, I will respond to points and artificial behaviour. raised by the hon. Member for Birmingham, Ladywood However, I stress that the Government take simplification on the measures relating to promoters of tax avoidance seriously. The Office of Tax Simplification has made a schemes. She asked whether HMRC already has sufficient large number of recommendations, round about the powers to tackle abusive schemes. The legislation before majority of which have been implemented by this us is about promoters, not schemes. The aim is to Government in the course of our proceedings in recent reduce the supply of avoidance schemes by tackling weeks. We have implemented a number of OTS promoter behaviour. To do that effectively, HMRC recommendations, but it is not a panacea for all areas of needs specific powers to require promoters to comply tax avoidance. with conduct notices and when a monitoring notice is in place HMRC will be able to use new information powers A question was asked about HMRC’s resources and and penalties. whether it will be able to implement the new powers before us. The high-risk promoter rules will be operated I was asked where the line is drawn for the high-risk by the new counter-avoidance directorate in HMRC, promoter regime. The rules are aimed at a small number consisting of 800 experienced HMRC officers, who will of individuals who display the most recalcitrant behaviour. be responsible for tackling marketing avoidance. We They sell schemes that generally do not work and they believe that the resources are sufficient. do not co-operate with their clients and HMRC in resolving tax disputes. Most promoters do not display It is worth pointing out that, going back to the this behaviour and it would not be right to use these comprehensive spending review of 2010 and subsequent powers against tax advisers who are co-operative. Budgets and autumn statements, as a Government we have invested £1 billion over this period to ensure that I was asked whether the measures could be too broad HMRC can do more to deal with avoidance and evasion. and whether innocent tax advisers could be caught up. So far that seems to be working well, with record levels A person has to be a promoter of schemes that give a of HMRC yields. tax advantage and to have made a significant breach of a threshold condition to fall within the legislation. The The amendments tabled by my hon. Friend the Member vast majority of tax advisers will not be in that position. for Dover would introduce a tax offence for promoting The definition of promoter can be narrowed by a statutory abusive tax avoidance schemes. While I appreciate my instrument and any refinements to the definition can be hon. Friend’s reasons for tabling the amendments, he retrospective to Royal Assent. To come within these will not be surprised to learn that I will not be supporting rules, a threshold criterion must be triggered; examples them. However, he has raised some important points of the threshold criteria include a breach of the banking for the Committee. code of practice or disciplinary action by a professional As I said, there is no doubt that, as a Government, we body. have a strong record in tackling avoidance. In the past I was asked if promoters should face fines if a scheme two years, we have introduced some groundbreaking fails. These measures will ensure that promoters who anti-avoidance legislation: the general anti-abuse rule; display recalcitrant behaviour will not be allowed to get follower notices; accelerated payments; and the high-risk away with it any longer; any further developments in promoter rules; as well as more targeted legislative this policy will require detailed consultation. We have changes. worked on the basis of wanting to consult properly. We have demonstrated our resolve to act against tax However, the Government will consider their options in avoidance, and we will not hesitate to act further if future. necessary. The GAAR is specifically designed to tackle In response to concerns raised over naming and abusive avoidance schemes. If a scheme falls foul of the shaming—the Chartered Institute of Taxation said that GAAR, the promoter is within the bounds of this naming could be seen as a badge of honour—the wording legislation. We expect that the GAAR and the high-risk that the promoter will have to use when named will be promoter rules, alongside the existing sanctions that prescribed in the regulations. The wording will make it HMRC has against promoters, will be sufficient to clear that being named is not a source of pride. In many ensure that promoters cease to market abusive tax avoidance cases, taxpayers will find that that is more of a deterrent schemes. than an appeal. The changes proposed by the amendments are outside A wide point was made about avoidance and complexity. the remit of the extensive consultations that we have There is no doubt that there are times when complexity undertaken. They have informed our thinking on the in the tax system results in avoidance behaviour, as area, and we would not want to undermine the valuable taxpayers and their advisers seek to take advantage of contributions made by those who responded by changing particular complexities. However, sometimes the behaviour the policy at this late stage. The amendments would also 527 Public Bill Committee17 JUNE 2014 Finance Bill 528 increase the complexity of the legislation and provide to bring things to light, we have a great responsibility in operational challenges to implement it. I am therefore speaking out. But under legal professional privilege not inclined to accept them. However, I am grateful to things can be hidden away to prevent people from my hon. Friend for his provocative speech and for his getting to know what has been going on. The reason contribution to this important debate. why this is extremely important, and the reason why I Let me turn briefly to the amendments tabled by the raise this issue, is that legal professional privilege is so Government, which will ensure that the legislation works often not used responsibly, so that things that should as intended. Amendment 39 is a technical amendment come to light are hidden away. to clarify the drafting of clause 242. Amendments 40 to This form of privilege does not apply, under the 43 make two sets of changes. The first includes in Prudential case, to accountants. It does apply to lawyers. clause 244 an obligation on a promoter to inform What happens is this. A scheme is devised. The documents certain of its intermediaries of its promoter reference are written up by a firm of accountants—the promoter. number. The second clarifies the time limit in which the They are given to the lawyers. The lawyers write an promoter has to notify its promoter reference number opinion on it. The documents therefore become subject to certain clients who have used its schemes. to privilege, being opined upon, and the other documents Amendments 44 to 46 are three identical amendments are shredded. My brief question to the Minister is, to clause 251 and clarify internal inconsistencies in the could it be amended? clause that arise due to the use of the terms “request” and “requirement”. Amendment 47 ensures that clause 226 allows the relevant client or relevant intermediary to Mr Gauke: My hon. Friend raises an interesting provide documents as well as information to HMRC. point. It would be fair to say that legal professional Amendment 48 to clause 270 includes inheritance tax privilege is a common law and fundamental right and and a 20-year extended time limit to recover any tax lost any change to that position would have to undergo a due to a person’s failure to inform HMRC of their full consultation. I have certainly received representations promoter reference number. Amendment 49 narrows from groups representing, for example, the accountancy the application of clause 272 so that it does not go beyond profession who argue that there is a distortion in the the policy intent of the measure. Amendment 50 is a legal market as a consequence. I am grateful to my hon. minor change to schedule 31 to reflect the changes to Friend for raising the point. I would simply say that any clause 244. Finally, amendment 51 to schedule 32 makes change would be a significant matter and would require it clear that Scottish partnerships are not included in considerable thought and consultation before anything the partnership provisions because they are legal entities was done. in their own right. As I said at the outset, this is a major new development. If a promoter tries to pull the wool over HMRC’s eyes, 4.15 pm the likelihood is that they will quickly find themselves in this regime, having to improve their behaviour or face Charlie Elphicke: I thank the Minister for that. To stiff penalties. I believe that taking these steps is the close, I note that the judgment in the Prudential case right and fair approach. It is fair to promoters who play says that this is a matter for Parliament to sort out. The by the rules and fair to the millions of taxpayers who judgments of Lord Neuberger and Lord Hope clearly pay their tax on time. It is right to target those who try say that. The privilege I am looking at is that which is to escape their obligations and avoid tax. I hope that used to further a scheme; it is not where a taxpayer these clauses and schedules, as amended, can stand part seeks to defend a scheme and takes advice in connection of the Bill. with that offence. It is a privilege that is used to cloak the existence of the scheme that makes it very hard for Charlie Elphicke: I shall seek to withdraw my amendment HMRC to get to the bottom of what is going on. I beg at the appropriate moment but I wish to touch briefly to ask leave to withdraw the amendment. on clause 264 to which I tabled an amendment which, quite rightly, was not selected as it would turn the clause Amendment, by leave, withdrawn. on its head. Clause 264 states: Clause 227 ordered to stand part of the Bill. “Nothing in this Part requires any person to disclose to HMRC any privileged information.” Clauses 228 to 230 ordered to stand part of the Bill. Would the Minister consider further the whole issue Schedule 30 agreed to. of privileged information? This is legal professional Clauses 231 to 241 ordered to stand part of the Bill. privilege, which is not to be confused with parliamentary privilege. As parliamentary privilege is to the day and to the sunshine, legal professional privilege is to the dark corner and the night. Parliamentary privilege allows that which is hidden to be revealed. It is the power of Clause 242 free speech. It is the power to name and shame, which I used a few moments ago and from time to time use in this House. Legal professional privilege is the privilege PUBLICATION BY MONITORED PROMOTER to hide, to keep secret, to take advice from a client to Amendment made: 39, in clause 242, page 163, line 19, their lawyer and for it never to come to light. So it after “subsection (3)” insert “or (10)”—(Mr Gauke.) remains for ever in a dark corner. Clause 242, as amended, ordered to stand part of the Both types of privilege and all privilege are a great Bill. responsibility. In using the power under the Glorious Revolution, the Bill of Rights, to name and shame and Clause 243 ordered to stand part of the Bill. 529 Public Bill CommitteeHOUSE OF COMMONS Finance Bill 530

Clause 244 Schedule 31

PENALTIES DUTY OF MONITORED PROMOTER TO NOTIFY CLIENTS OF NUMBER Amendment made: 50, in schedule 31, page 546, line 34, Amendments made: 40, in clause 244, page 165, line 17, at leave out “client”and insert “clients and intermediaries”— end insert “, and (Mr Gauke.) (d) any person who the monitored promoter could Schedule 31, as amended, agreed to. reasonably be expected to know is a relevant Clauses 268 and 269 ordered to stand part of the Bill. intermediary in relation to a relevant proposal of the monitored promoter.” Amendment 41, in clause 244, page 165, line 34, at Clause 270 end insert— ‘( ) A person is a relevant intermediary in relation to a relevant proposal of a monitored promoter if the person meets the EXTENDED TIME LIMIT FOR ASSESSMENT conditions in section 229(a) to (c) (meaning of “intermediary”) Amendment made: 48, in clause 270, page 180, line 45, at at any time while the monitoring notice in relation to the end insert— monitored promoter has effect.” Amendment 42, in clause 244, page 165, line 36, leave ‘( ) In section 240 of IHTA 1984 (underpayments)— out “or (2)(c)” (a) in subsection (3) for “and (5)” substitute “to (5A)”, Amendment 43, in clause 244, page 165, line 41, at (b) in subsection (5), for “those dates” substitute “the end insert— dates in subsection (2)(a) and (b)”, (c) after subsection (5) insert— “() in the case of a person falling within subsection (2)(c), the period of 30 days beginning with the later of the “(5A) Proceedings in a case involving a loss of tax attributable day of the notification mentioned in subsection (1) to arrangements which were expected to give rise to a tax and the first day on which the monitored promoter advantage in respect of which a person liable for the tax was could reasonably be expected to know that the under an obligation to make a report under section 246 of the person fell within subsection (4), and Finance Act 2014 (duty to notify Commissioners of promoter ‘() in the case of a person falling within subsection (2)(d), reference number) but failed to do so, may be brought at any time the period of 30 days beginning with the later of the not more than 20 years after the later of the dates in subsection day of the notification mentioned in subsection (1) (2)(a) and (b).”, and and the first day on which the monitored promoter (d) in subsection (8), for “, (5) and (6)” substitute “to could reasonably be expected to know that the (6)”.’—(Mr Gauke.) person was a relevant intermediary in relation to a Clause 270, as amended, ordered to stand part of the relevant proposal of the monitored promoter.”— Bill. (Mr Gauke.) Clause 244, as amended, ordered to stand part of the Clause 271 ordered to stand part of the Bill. Bill. Clauses 245 to 250 ordered to stand part of the Bill. Clause 272

Clause 251 OFFENCE OF CONCEALING ETC DOCUMENTS FOLLOWING INFORMAL NOTIFICATION DUTY OF PERSON DEALING WITH NON-RESIDENT Amendment made: 49, in clause 272, page 182, line 13, MONITORED PROMOTER leave out paragraph (b) and insert— Amendments made: 44, in clause 251, page 170, line 39, “() the officer of Revenue and Customs intends to seek the leave out paragraph (b) and insert— approval of the tribunal to the giving of the “() requires the person to provide the information.” notice.”—(Mr Gauke.) Amendment 45, in clause 251, page 171, line 11, leave Clause 272, as amended, ordered to stand part of the out paragraph (b) and insert— Bill. “() requires the person to provide the information.” Clauses 273 and 274 ordered to stand part of the Bill. Amendment 46, in clause 251, page 171, line 19, leave out paragraph (b) and insert— “() requires the person to provide the information.”—(Mr Schedule 32 Gauke.) Clause 251, as amended, ordered to stand part of the Bill. PROMOTERS OF TAX AVOIDANCE SCHEMES: Clauses 252 to 265 ordered to stand part of the Bill. PARTNERSHIPS Amendment made: 51, in schedule 32, page 552, line 9, leave out sub-paragraph (2) and insert— Clause 266 ‘( ) But in this Part of this Act “partnership” does not include a body of persons forming a legal person that is distinct from CONFIDENTIALITY themselves (and paragraphs 2 to 21 may accordingly be Amendment made: 47, in clause 266, page 179, line 4, after disregarded in applying this Part of this Act to such a body of “information” insert “or documents”—(Mr Gauke.) persons).’—(Mr Gauke.) Clause 266, as amended, ordered to stand part of the Schedule 32, as amended, agreed to. Bill. Clauses 275 and 276 ordered to stand part of the Bill. Clause 267 ordered to stand part of the Bill. Clause 277 ordered to stand part of the Bill. 531 Public Bill Committee17 JUNE 2014 Finance Bill 532

Clause 278 updated version of a previous protocol from 2012. It covers all banks that notified the commissioners that THE CODE OF PRACTICE ON TAXATION FOR BANKS: they have unconditionally committed to complying with HMRC TO PUBLISH REPORTS the code on or after 31 May 2013, and sets out four possible views that the HMRC may have regarding a Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co- bank’s compliance with the code. op): I beg to move amendment 57, in clause 278, page 187, line 28, at end insert— I will not go into a great deal more detail about what the clauses do because I am sure the Minister will wish ‘(1) Before bringing forward any further reform of The Code of Practice on Taxation of Banks, the Chancellor shall lay before to say something about that, but I do want to make a Parliament a report considering the impact on the total receipts couple of comments, raise some issues and ask some paid to the Exchequer since 2010 by— questions. (a) Uk banking groups; We support the underlying principle of the code of (b) building society groups; practice, which goes back to 2009, under the previous (c) foreign banking groups; and Government. It is important to ensure that banks and (d) relevant non-banking groups. building societies meet their tax obligations and make (2) The report will pay particular attention to receipts from— every reasonable attempt to comply with the letter and (a) corporation tax; spirit of the law. We support making the code more (b) the bank levy; and stringent, ensuring that banks that fail to comply are (c) bank payroll tax.” made to face the consequences. We welcome the distinction that has been drawn between the smaller and larger The Chair: With this it will be convenient to discuss banks and building societies, with the former having to the following: comply only with the first part of the code. However, we Clause stand part. believe that the Government should take a more holistic Clauses 279 to 281 stand part. approach to the bank taxation regime and that is why we have tabled the amendment. Cathy Jamieson: We are getting there. I am sure It would be straying from the subject of the clause to people will be disappointed when these wondrous move too much into discussion of how the bank levy proceedings come to an end. Was that a cry for more? I has failed to generate anything like the revenues projected, suspect not. It is a pleasure to be here this afternoon to so I will not succumb to the temptation to do that yet speak about these clauses. Of course, they arose following again at this point. However, it is important to understand a consultation that was published back in May 2013 by the reasons for that, which is why we want the amendment HMRC on strengthening the code of practice on taxation to be passed so that the report would look at the for banks. That included draft legislation requiring taxation regime in the round. HMRC to publish an annual report on the operation of A concern about the proposed changes to the code the code. has been raised by the CIOT. The changes have been The code is one element of the Government’s anti- described as avoidance strategy and is intended to change the attitudes and behaviours of banks towards tax avoidance. We “fundamentally flawed and potentially damaging to the UK’s have had a thorough debate on tax avoidance and are reputation as a place for inward investment…The proposals need to be reconsidered to ensure that they are proportionate, fair, now looking at some of the specific issues around workable and do not damage the UK’s reputation.” banks. Adoption of the code is voluntary, but the list of banks that have adopted it is published. So far, I understand That highlights an uncertainty that may surround what that a total of 283 banks with UK operations have could be described as the intentions of Parliament and signed up to the code, including those defined as the the spirit of the law in determining whether a bank has so-called big banks. breached the code. Some respondents to the consultation argued that a participating bank could, quite reasonably, The amendment would require the Government, prior have a different interpretation of the intentions of to bringing forward any further reform of the code of Parliament from that of HMRC. This would be a good practice, to lay before Parliament a report considering opportunity for the Minister to address that point because the impact on the total receipts paid to the Exchequer it is suggested that HMRC is being established as “judge, by UK and foreign banks, and building societies. We jury” and, indeed, “executioner” and I am sure that want specific attention paid to the receipts from corporation Ministers would not wish to have that tag attached to it tax, the bank levy and the bank payroll tax. but, none the less, want to deal with the questions It is important to recognise that clauses 278 to 281 raised. require the tax commissioners for HMRC to publish a report on the operation of the code of practice on The Law Society felt that HMRC had been granted taxation for banks. The report must be published no too much discretion, arguing: later than the end of the calendar year in which a “It is not appropriate for HMRC to set itself up as the only reporting period ends. The commissioners must determine arbiter of parliamentary intention in relation to matters within breaches of the code and, where a breach has been the code. This is a matter ultimately for the courts to interpret on established, may name the bank or entity in the report the basis of the legislation passed by Parliament and the surrounding and must publish information relating to the breach, circumstances.” except in instances where that is not deemed to be It also raised concerns about the supposed voluntary reasonably practical. It also provides for the introduction nature of the code, pointing out that it is hardly voluntary of a governance protocol, delineating how the code will when banks that have not signed up can be publicly operate and setting out the rules for compliance. The named and suffer adverse publicity as a result. It would protocol was published in December 2013 and is an be interesting to hear the Minister’s comments on that. 533 Public Bill CommitteeHOUSE OF COMMONS Finance Bill 534

[Cathy Jamieson] non-compliance with its code commitments. To address that, at Budget 2013 the Government announced plans I understand that the Government have, to some to strengthen the code by making its operation more extent, picked up on and revised the protocol in the transparent. Banks were then asked to re-adopt on that light of the concerns of some of the respondents to the basis. At autumn statement 2013, following consultation consultation. However, it is a concern that some issues with the sector, HMRC published a list of those banks have not yet been addressed by revisions and I would be and building societies that had adopted the strengthened interested to hear the Minister’s view on some of the code. An updated list including further banks was published points raised. I have a few questions. Can he provide at Budget 2014. any information on the impact of the code to date on Clauses 278 to 281 introduce legislation requiring the level of taxation paid by the banks? What does he HMRC to produce an annual report on the operation have to say on the observations of the CIOT, the Law of the code. The first report will be published next year Society and others that responded to the consultation and will cover the period ending 31 March 2015. Clause that the revised code grants HMRC disproportionate 278 sets out the groups and entities to which the code power with insufficient safeguards to ensure that it is applies, which are those in the scope of the bank levy fairly exercised? That is one of the themes that has run provisions. The clause also provides that, in the annual through today. Everyone wants to see as much as possible report, HMRC may name any bank or building society done to ensure that individuals and organisations pay that it determines has breached the code. the appropriate taxes but, at the same time, proper checks and balances have to be built in. I would like to Clause 279 provides that banks and building societies hear from him on that. wishing to sign up to the code must write to HMRC confirming unconditional commitment to the code. To withdraw from the code, a bank or building society 4.30 pm must write to HMRC confirming that it is no longer Do the Government agree with the recommendation unconditionally committed to the code. Where a bank that HMRC should consult the Financial Conduct or building society is named in an annual report as Authority and Prudential Regulation Authority before having breached the code, it will be treated as having publicly naming a bank found to be in breach of the withdrawn from the code until such time as HMRC is code? Does the Minister consider it fair that HMRC satisfied that it has once again met its commitments can supersede the conclusions of the independent reviewer under the code. in deciding whether a bank has breached the code? Does that not risk undermining the legitimacy of the Clause 280 provides that a governance protocol will review system? set out how the code will operate. The protocol was published alongside the draft legislation and the autumn We have not had the opportunity to discuss the statement and sets out a number of safeguards, including shadow banking sector in detail in this debate, but the requirement for HMRC to commission a report during the past few days concerns have been raised from an independent reviewer before naming a bank or about it. Will the Minister consider extending the code building society as having breached the code. Clause 281 to encompass that sector to address those concerns? So provides that HMRC must consult members of the that we can understand the Government’s thinking, bank and building society sector before it publishes or does he have any comment on the assertion to which I changes any future guidance on the code. referred that the code could damage inward investment? I would like to hear his response before deciding whether I am conscious that during last year’s consultation, to press the amendment. concerns were raised by the banks and legal profession about HMRC rather than an independent third party having the ultimate decision on whether a bank should Mr Gauke: Clauses 278 to 281 require HMRC to be publicly named for being non-compliant. The produce annual reports from 2015 on how the code of Government listened carefully to those concerns. Although practice on taxation for banks has operated. The reports we consider it is right that HMRC commissioners who will provide details of those banks and building societies are directly answerable to Parliament remain the final that have signed up to the code as well as those that have arbiter on whether a bank has breached its commitments not. It may also name any bank or building society that to HMRC under the code, we have introduced additional HMRC determines has not met its commitments under robust safeguards. The independent reviewer is expected the code. to be someone who is independent of both the banking The voluntary code was introduced in 2009. Its purpose sector and HMRC and is held in good standing by is to encourage banks to follow the spirit as well as the both, such as a retired High Court judge. HMRC may letter of the tax law. It is a key element of the Government’s reach a different determination from the independent anti-avoidance strategy and was designed to change the reviewer only in two limited and exceptional circumstances attitudes and behaviour of banks towards avoidance, where, viewed objectively, the independent reviewer’s given their unique position as potential users, promoters opinion is unreasonable based upon the Wednesbury and funders of tax avoidance schemes. Since the code’s test of reasonableness used in judicial review proceedings, introduction, HMRC has seen a positive response from or where, viewed objectively, there are other exceptional banks in their tax planning and transparency, which is and compelling reasons for HMRC reaching a different in large part down to changing attitudes by banks conclusion. towards avoidance. The code has been a significant Where, contrary to the opinion of the independent factor in that change. reviewer, HMRC determines that a bank or building However, the code lacks public transparency. There society should be named as non-compliant, and the are also no obvious downsides for banks in not adopting bank or building society commences judicial review the code and no codified consequences for a bank’s proceedings against HMRC, the onus will be on HMRC 535 Public Bill Committee17 JUNE 2014 Finance Bill 536 to prove that it acted reasonably in reaching a different Furthermore, as the code is about a bank’s behaviour, opinion from that of the independent reviewer. This it follows that any decision on whether a bank should be reversal of the normal burden of proof is in recognition named as not complying with its code obligations should of the possible commercial and reputational damage be made close to the events. The inclusion of a formal that may result from a bank or building society being appeals process could mean the decision was not published named in an annual report. until years after the events, which would be counter to Turning to amendment 57, we already considered a the code’s behavioural change objectives. similar amendment when we debated clause 113, and Could the provisions damage inward investment? also during the Committee of the whole House. I do not There is no evidence so far to suggest that that will be know whether to be disappointed that Opposition Members the case. HMRC will clearly monitor the situation and are not showing more originality in their amendments keep it under review. or whether to be impressed by their consistency. Even Do the Government intend to consult the PRA and when we have clauses setting out a requirement to the FCA before naming a bank? There are no proposals produce reports, we still have an amendment requesting to do so, but we recognise that naming a bank is a that different reports are produced, but there we go. potential source of reputational damage, which is why The amendment asks the Government to lay before we have provided a number of significant safeguards to Parliament a report that considers overall tax receipts prevent banks from being incorrectly named. from UK banks, foreign banks, building societies and I was asked how much additional tax has been brought relevant non-banking groups since 2010. As I have in. It is not possible to determine how much has been explained before, HMRC already publishes statistics on paid as a result of the code, but the code increases PAYE, the bank levy, corporation tax and bank payroll transparency and HMRC’s ability to tackle avoidance tax receipts from the banking sector each year, although in real time. not broken down by different groups of banks. The To conclude, now is the right time to strengthen the most recent publication, from August 2013, showed code. The changes made by clauses 278 to 281 help to that the relevant tax receipts from the banking sector provide full transparency on which banks have adopted were £21.7 billion in 2012-13. This represented an increase the code and clear sanctions against those that breach of 6%—or £1.2 billion—on the previous year, despite it, while also providing robust safeguards for participating corporation tax receipts continuing to be depressed by banks. That will help to reinforce the behavioural losses incurred during the financial crisis. The publication improvements already evident in the banking sector shows that 2012-13 receipts remain below the peak and support fairness in the tax system. I hope the reached in 2010-11. However, the 2010-11 figure was clauses can stand part of the Bill. inflated by receipts from the bank payroll tax, a one-off measure implemented on the day of the announcement, which the previous Chancellor said could not be introduced Cathy Jamieson: I thank the Minister for his expansive permanently. I am tempted to read the whole quote, but answers, which took note of all my points, as well as on this occasion I will not. However, hon. Members laying out the Government’s views on a number of should be aware of it. issues so that we have them on the record. I do not know whether to be disappointed, although Bonuses in the banking sector have fallen markedly I am not surprised, that the Minister has once again since the bank payroll tax applied, with the yield from a failed to succumb to my pleas for a report, even though repeat tax likely to be much lower. The Government it is, on this occasion, just a different kind of report have also taken wider action since 2010-11 to tackle from the one he proposes to introduce. None the less, it unacceptable remuneration and ensure that pay does is important to look at the wider issues around the not incentivise excessive risk-taking. Under the PRA’s taxation of the banking sector, so I will, on what is remuneration code, large parts of bonuses must now be probably the last occasion I will have the opportunity to deferred and paid in shares. Firms are now required to do so in this Committee, try one more time and press have in place clawback policies to reduce or revoke pay the amendment to a vote. where subsequent information on poor performance comes to light. That is why the Government chose Question put, That the amendment be made. instead to introduce a permanent tax on banks’ balance The Committee divided: Ayes 14, Noes 18. sheets, which helps to ensure a fair contribution from Division No. 13] the banking sector while supporting the regulatory regime by encouraging banks to move towards safer funding AYES profiles. I hope that will suffice to explain why we think the amendment tabled by Opposition Members is Dakin, Nic McKenzie, Mr Iain unnecessary. Evans, Chris McKinnell, Catherine Gilmore, Sheila Mahmood, Shabana The hon. Member for Kilmarnock and Loudoun Glindon, Mrs Mary Mearns, Ian asked whether HMRC was acting as judge, jury and Jamieson, Cathy Pearce, Teresa executioner. As I said earlier, concerns were raised Kane, Mike Vaz, Valerie during the 11-week consultation exercise conducted Leslie, Chris Williamson, Chris over the summer. We have introduced the independent reviewer, as I mentioned. It is right that HMRC NOES commissioners remain the final arbiter under the protocol Dinenage, Caroline Gauke, Mr David of whether a bank has breached its commitments to Duddridge, James Hames, Duncan HMRC under the code. Parliament, assisted by the Elphicke, Charlie Heaton-Harris, Chris National Audit Office, retains its oversight of HMRC’s Fuller, Richard Kwarteng, Kwasi decision-making processes. Garnier, Mark Leadsom, Andrea 537 Public Bill CommitteeHOUSE OF COMMONS Finance Bill 538

Menzies, Mark Shelbrooke, Alec (2) The Chancellor of the Exchequer must publish the report Morgan, rh Nicky Smith, Henry of the review and lay the report before the House.”—(Shabana Pincher, Christopher Swales, Ian Mahmood.) Rudd, Amber Wheeler, Heather Brought up, and read the First time. Question put, That the clause be read a Second time. Question accordingly negatived. The Committee divided: Clause 278 ordered to stand part of the Bill. Ayes 14, Noes 18. Clauses 279 to 283 ordered to part of the Bill. Division No. 15] 4.45 pm AYES Schedule 33 agreed to. Dakin, Nic McKenzie, Mr Iain Clauses 285 to 290 ordered to stand part of the Bill. Evans, Chris McKinnell, Catherine Gilmore, Sheila Mahmood, Shabana Schedule 34 agreed to. Glindon, Mrs Mary Mearns, Ian Clauses 291 to 295 ordered to stand part of the Bill. Jamieson, Cathy Pearce, Teresa Kane, Mike Vaz, Valerie New Clause 1 Leslie, Chris Williamson, Chris

LOWER RATE OF TAX NOES ‘(1) The Chancellor of the Exchequer shall, within six months Dinenage, Caroline Leadsom, Andrea of Royal Assent, lay before Parliament a report containing Duddridge, James Menzies, Mark proposals for an income tax rate of 10 per cent on a band of Elphicke, Charlie Morgan, rh Nicky income above the personal allowance. Fuller, Richard Pincher, Christopher (2) The report mentioned in subsection (1) above shall provide Garnier, Mark Rudd, Amber for the full benefit of the 10 per cent. rate not being available to Gauke, Mr David Shelbrooke, Alec taxpayers paying the higher or additional rates of tax.”— Hames, Duncan Smith, Henry (Shabana Mahmood.) Heaton-Harris, Chris Swales, Ian Brought up, and read the First time. Kwarteng, Kwasi Wheeler, Heather Question put, That the clause be read a Second time. The Committee divided: Ayes 13, Noes 18. Question accordingly negatived. Division No. 14] New Clause 3 AYES Dakin, Nic McKinnell, Catherine PERSONAL ALLOWANCE FOR THOSE BORN AFTER 5 Gilmore, Sheila Mahmood, Shabana APRIL 1948 Glindon, Mrs Mary Mearns, Ian Jamieson, Cathy “The Chancellor of the Exchequer shall, within three months Pearce, Teresa Kane, Mike of the passing of this Act, undertake a review of the impact of the removal of the age-related personal allowance on anyone Leslie, Chris Vaz, Valerie who reached the age of 65 on or after April 2013 and place a McKenzie, Mr Iain Williamson, Chris copy in the Library.”—(Shabana Mahmood.) Brought up, and read the First time. NOES Question put, That the clause be read a Second time. Dinenage, Caroline Leadsom, Andrea Duddridge, James Menzies, Mark The Committee divided: Ayes 14, Noes 18. Elphicke, Charlie Morgan, rh Nicky Division No. 16] Fuller, Richard Pincher, Christopher Garnier, Mark Rudd, Amber AYES Gauke, Mr David Shelbrooke, Alec Hames, Duncan Smith, Henry Dakin, Nic McKenzie, Mr Iain Heaton-Harris, Chris Swales, Ian Evans, Chris McKinnell, Catherine Kwarteng, Kwasi Wheeler, Heather Gilmore, Sheila Mahmood, Shabana Glindon, Mrs Mary Mearns, Ian Jamieson, Cathy Pearce, Teresa Question accordingly negatived. Kane, Mike Vaz, Valerie Leslie, Chris Williamson, Chris

New Clause 2 NOES Dinenage, Caroline Leadsom, Andrea HIGHER RATE OF TAX Duddridge, James Menzies, Mark Elphicke, Charlie Morgan, rh Nicky “(1) The Chancellor of the Exchequer shall, within three Fuller, Richard Pincher, Christopher months of the passing of this Act, undertake a review of the number of people paying the 40 per cent rate of income tax in the Garnier, Mark Rudd, Amber years— Gauke, Mr David Shelbrooke, Alec Hames, Duncan Smith, Henry (a) 2010-2011; Heaton-Harris, Chris Swales, Ian (b) 2011-2012; Kwarteng, Kwasi Wheeler, Heather (c) 2012-2013; and (d) 2013-2014. Question accordingly negatived. 539 Public Bill Committee17 JUNE 2014 Finance Bill 540

New Clause 4 Division No. 18]

CAPITAL GAINS TAX AND EMPLOYEE SHAREHOLDERS AYES “(1) The Chancellor of the Exchequer shall, within three Dakin, Nic McKenzie, Mr Iain months of the passing of this Act, undertake a review of the Evans, Chris McKinnell, Catherine impact on tax revenues of employee shareholder status as defined Gilmore, Sheila Mahmood, Shabana by section 205A of the Employment Rights Act 1996, and set out Glindon, Mrs Mary Mearns, Ian the conclusion of the review in a report. Jamieson, Cathy Pearce, Teresa (2) The report referred to in subsection (1) above must in Kane, Mike Vaz, Valerie particular set out— Leslie, Chris Williamson, Chris (a) the impact on total capital gains tax receipts paid to the Exchequer arising from the capital gains NOES exemptions under section 236B of the Taxation of Chargeable Gains Act 1992; Dinenage, Caroline Leadsom, Andrea Duddridge, James Menzies, Mark (b) the estimated value of shares owned by employees Elphicke, Charlie Morgan, rh Nicky working in employee shareholder jobs and the Fuller, Richard Pincher, Christopher number of such employees. Garnier, Mark Rudd, Amber (3) The Chancellor of the Exchequer must publish the report Gauke, Mr David Shelbrooke, Alec of the review and lay the report before the House. Hames, Duncan Smith, Henry (4) Subsequent reviews must be completed before the end of Heaton-Harris, Chris Swales, Ian each period of 12 months beginning with the date on which the Kwarteng, Kwasi Wheeler, Heather previous review was completed.”—(Shabana Mahmood.) Brought up, and read the First time. Question accordingly negatived. Question put, That the clause be read a Second time. The Committee divided: Ayes 14, Noes 18. New Clause 7 Division No. 17] FALSE SELF-EMPLOYMENT IN THE CONSTRUCTION AYES SECTOR Dakin, Nic McKenzie, Mr Iain ‘(1) The Chancellor of the Exchequer shall, within three Evans, Chris McKinnell, Catherine months of Royal Assent, undertake a review of disguised Gilmore, Sheila Mahmood, Shabana self-employment in the construction sector. Glindon, Mrs Mary Mearns, Ian (2) The report referred to in subsection (1) above must in Jamieson, Cathy Pearce, Teresa particular examine the setting of criteria for automatically Kane, Mike Vaz, Valerie deeming people to be employed for tax purposes if they meet Leslie, Chris Williamson, Chris those criteria. (3) The Chancellor of the Exchequer must publish the report NOES of the review and lay the report before the House.”—(Shabana Dinenage, Caroline Leadsom, Andrea Mahmood.) Duddridge, James Menzies, Mark Brought up, and read the First time. Elphicke, Charlie Morgan, rh Nicky Question put, That the clause be read a Second time. Fuller, Richard Pincher, Christopher Garnier, Mark Rudd, Amber The Committee divided: Ayes 14, Noes 19. Gauke, Mr David Shelbrooke, Alec Division No. 19] Hames, Duncan Smith, Henry Heaton-Harris, Chris Swales, Ian Kwarteng, Kwasi Wheeler, Heather AYES Dakin, Nic McKenzie, Mr Iain Question accordingly negatived. Evans, Chris McKinnell, Catherine Gilmore, Sheila Mahmood, Shabana Glindon, Mrs Mary Mearns, Ian Jamieson, Cathy Pearce, Teresa Kane, Mike Vaz, Valerie New Clause 5 Leslie, Chris Williamson, Chris

NOES REVIEW OF REFORM TO THE ANNUAL INVESTMENT Dinenage, Caroline Menzies, Mark ALLOWANCE Duddridge, James Morgan, rh Nicky ‘(1) The Chancellor of the Exchequer shall, within three Elphicke, Charlie Pincher, Christopher months of the passing of this Act, undertake a review of the Fuller, Richard impact on business investment of changes to section 51A of the Rudd, Amber Garnier, Mark Capital Allowance Act 2001 made by the Finance Act 2011. Gauke, Mr David Rutley, David (2) The Chancellor of the Exchequer must publish the report Hames, Duncan Shelbrooke, Alec of the review and lay the report before the House.”—(Shabana Heaton-Harris, Chris Smith, Henry Mahmood.) Kwarteng, Kwasi Swales, Ian Brought up, and read the First time. Leadsom, Andrea Wheeler, Heather Question put, That the clause be read a Second time. The Committee divided: Ayes 14, Noes 18. Question accordingly negatived. 541 Public Bill CommitteeHOUSE OF COMMONS Finance Bill 542

New Clause 8 Hon. Members: More!

PENSION FLEXIBILITY:TREASURY ANALYSIS ‘(1) The Chancellor of the Exchequer shall, within six months The Chair: Order. I am sorry to interrupt you, Minister, of this Act receiving Royal Assent, publish and lay before the House of Commons any analysis prepared by the Treasury prior but the programme order says that we must finish at to the publication of Budget 2014 relating to the impact of 5 o’clock, so perhaps you would keep it brief. I am changes made by sections 39 to 43 of this Act to Schedules 28 allowing a little leeway, but we are subject to a programme and 29 to the Finance Act 2004. order to which we are supposed to be sticking. (2) The information published under subsection (1) must include— (a) any assessment made of the impact of the provision for Mr Gauke: Apologies, Mr Caton. independent face to face guidance on the 2004 Act; I am pleased that the Bill has received such scrutiny. (b) the distributional impact, by income decile of the Inevitably, we have focused on some aspects more than population, of changes made by sections 39 to 43 of this Act; others, but our debate has been wide ranging. There (c) a behavioural analysis; and have been many points on which Members have disagreed, (d) the financial risk assessment.”—(Shabana Mahmood.) but I am pleased that there has been consensus in some Brought up, and read the First time. areas, including today on important matters of tax avoidance. Question put, That the clause be read a Second time. The Committee divided: Ayes 14, Noes 19. I am also pleased that the Committee’s scrutiny has been a model of efficiency. Last Thursday, we had the Division No. 20] shortest sitting of the Finance Bill Committee in memory, AYES when we got through 74 clauses and three schedules in Dakin, Nic McKenzie, Mr Iain 36 minutes. I was sad that we did not manage to keep up Evans, Chris McKinnell, Catherine that rate all the way through our consideration. Gilmore, Sheila Mahmood, Shabana I am grateful to Mr Streeter and to you, Mr Caton, Glindon, Mrs Mary Mearns, Ian for your valuable input. I thank the representative bodies Jamieson, Cathy Pearce, Teresa and other interested parties who have played— Kane, Mike Vaz, Valerie Leslie, Chris Williamson, Chris The Chair: Order. I am sorry, Minister, but I must NOES stop you there. Thank you for your kind words. Dinenage, Caroline Menzies, Mark Duddridge, James Morgan, rh Nicky Elphicke, Charlie Pincher, Christopher Shabana Mahmood: Further to that point of order, Fuller, Richard Rudd, Amber Mr Caton. I am sure that the Minister was about to Garnier, Mark Rutley, David thank the officials, Clerks and Whips who have served Gauke, Mr David the Committee so well. I put on record my thanks to all Hames, Duncan Shelbrooke, Alec Smith, Henry members of the Committee for how they have engaged Heaton-Harris, Chris with our debates on and scrutiny of the Bill. I thank the Swales, Ian Kwarteng, Kwasi ministerial team for its courtesy and diligence in responding Leadsom, Andrea Wheeler, Heather to our many points and questions, and my Front-Bench colleagues for their contributions. Question accordingly negatived. I thank Mr Streeter and you, Mr Caton, for chairing Question proposed, That the Chair do report the Bill, the Committee and getting us through to the end. We as amended, to the House. are most grateful. 5pm Question put and agreed to. Mr Gauke: On a point of order, Mr Caton. Before Bill, as amended, accordingly to be reported. you put that Question, I should be grateful if the Committee would indulge me with its attention for a 5.3 pm few more minutes. I am sure that hon. Members have Committee rose. not yet heard enough from me today— 543 Public Bill Committee17 JUNE 2014 Finance Bill 544

Written evidence reported to the House FB 04 EDF Tax Ltd FB 03 Mr Girish Patel