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Written Ministerial Statements
Friday 4 March 2005
TREASURY
Finance Bill
The Paymaster General (Dawn Primarolo): Schemes are currently being promoted by professional advisors that enable companies to avoid tax. Legislation will be included in the next Finance Bill to tackle tax avoidance through exploitation of both the transfer pricing and loan relationship rules.
Transfer pricing rules will be extended to transactions involving the financing of a business by persons (companies, partnerships or individuals) if they act together in relation to the financing and collectively they could control the business. These new rules will apply from today for financing under new or changed contracts, and from 1 April 2007 for debt finance provided under pre-existing contracts.
Transfer pricing rules will also be extended to apply to financing arrangements of a business in the six-month period before a person involved in the arrangements started to control the business. This change will apply from today to both new and existing financing.
Loan relationships rules that limit tax relief for late paid interest and discounts payable by close companies will be tightened up so that certain exemptions for these rules will apply only where the interest or discount is payable by a small or medium-sized enterprise and where the lender is not located in certain territories such as tax havens. This change will apply from today for financing under new or changed contracts, and from 1 April 2007 for finance provided under pre-existing contracts.
The scope of these rules will also be extended to include cases where the creditor is a person who controls a participator in the company (or where the creditor is connected to such a person). This change will apply from today to both new and existing financing.
Copies are being deposited in the Libraries of both Houses of today's Inland Revenue news release on these measures and a more detailed explanation is being published on the Inland Revenue website at:
http://www.inlandrevenue.gov.uk/international/ transfer-pricing.htm
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HEALTH
Coronary Heart Disease
The Parliamentary Under-Secretary of State for Health (Miss Melanie Johnson): The coronary heart disease national service framework (CHD NSF), published in March 2000, set out a blueprint for provision of fairer, faster, high-quality services for the prevention, diagnosis and treatment of coronary artery disease, based on 12 national standards.
A new CHD NSF chapter, on cardiac arrhythmias and sudden cardiac death, and the 2005 CHD NSF progress report "Leading the Way" were published today. Copies have been placed in the Library.
TRADE AND INDUSTRY
Financial Transparency Directives
The Secretary of State for Trade and Industry (Ms Patricia Hewitt): My Department has today published a consultation document on the implementation of directive 2000/52/EC amending the directive on the transparency of financial relations between member states and public undertakings. The objective of the directive as amended is to increase the transparency of funding given by Government and other public sector bodies to other bodies operating in the marketplace and which may be in receipt of state aid. The directive's provisions will improve the commission's ability to investigate potentially illegal state aid, including allegations of overcompensation for performing a public service obligation or the cross-subsidisation of public funds into other commercial activities.
A key objective of the consultation exercise is to gather information on which organisations are likely to be caught by the directive and whether and to what extent there may already be provisions in place that would meet the requirements of the directive, so that we can best judge how to implement. However, the Department's initial conclusion is that legislation may well be necessary to ensure full implementation of the directive. The consultation document therefore also seeks views on draft regulations.
It is estimated that the directive will affect less than 0.5 per cent. of UK businesses i.e. approximately 8,000 businesses out of a total of about 1.6 million, since it does not apply to entities with an annual turnover below euro 40 million, i.e. approximately £27.5 million (as at 02/03/05). According to statistics produced by the Office for National Statistics approximately 99.5 per cent. of UK businesses have an annual turnover of less than £25 million.
Copies of the consultation documents will be laid in the Libraries of both Houses and made available on the departmental website at: www.dti.gov.uk/ccp/stateaid