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In the Public Bill Committee, I indicated that the regulations relating to schedule 3 would be published by HMRC in draft and would be laid before the House once the Finance Bill has received Royal Assent. I also gave the undertaking that HMRC would informally consult interested parties to ensure that the guidance on the legislation provides the clarity that those groups seek. We have held detailed discussions with representatives and experts and are building many of their suggestions into the guidance. We anticipate that the guidance will be published next week, and I think that hon. Members accept that it will be entirely in
keeping with the approach that we have taken since the first draft regulations and legislation were published alongside the pre-Budget report.
We have improved the legislation and taken into account the views expressed at every stage of the process. I hope that I have reflected that tonight and provided the reassurance the hon. Members seek. The amendments are unnecessary or would jeopardise the intent of the clause.
Mrs. Villiers: The Financial Secretary has not reassured me. He has not added anything to his remarks in Committee, but the problems are still significant. The fact that the provision has been proposed at all indicates that IR35 has failed. If the legislation is adopted as drafted, I fear that the Government will be back in a year or so asking for further complicated legislation to try to deal with the problem. I therefore seek leave to withdraw the lead amendment, but I ask the House to divide on amendment No. 13.
Amendment, by leave, withdrawn.
Amendment proposed: No. 13, page 92, line 30, leave out lines 30 to 34 and insert—
‘(c) exerts a substantial degree of influence over the provision of those services by providing a standardised company product to the individual (“the worker”) whose services are then provided by the company.
(2A) For the purposes of subsection (2), arrangements involve a standardised company product if—
(a) the arrangements have standardised, or substantially standardised, documentation—
(i) the purpose of which is to enable the implementation, by the worker, of the arrangements; and
(ii) the form of which is determined by the provider, and is not tailored, to any material extent, to reflect the circumstances of the worker;
(b) the worker enters into a specific arrangement or series of arrangements; and
(c) that arrangement or that series of arrangements is standardised, or substantially standardised, in form and is connected with the provision of services by the worker.’.— [Mrs. Villiers.]
Question put, That the amendment be made:—
The House proceeded to a Division.
Mr. Speaker: Order. I ask the Serjeant at Arms to investigate the delay in the Aye Lobby.
The House having divided: Ayes 201, Noes 279.
AYES
Afriyie, Adam
Alexander, Danny
Amess, Mr. David
Arbuthnot, rh Mr. James
Atkinson, Mr. Peter
Bacon, Mr. Richard
Baldry, Tony
Barker, Gregory
Baron, Mr. John
Barrett, John
Bellingham, Mr. Henry
Benyon, Mr. Richard
Bercow, John
Beresford, Sir Paul
Blunt, Mr. Crispin
Bone, Mr. Peter
Brazier, Mr. Julian
Breed, Mr. Colin
Brokenshire, James
Brooke, Annette
Browning, Angela
Bruce, rh Malcolm
Burns, Mr. Simon
Burrowes, Mr. David
Burstow, Mr. Paul
Burt, Alistair
Butterfill, Sir John
Campbell, Mr. Gregory
Campbell, rh Sir Menzies
Carswell, Mr. Douglas
Cash, Mr. William
Clark, Greg
Clegg, Mr. Nick
Clifton-Brown, Mr. Geoffrey
Conway, Derek
Cox, Mr. Geoffrey
Crabb, Mr. Stephen
Davey, Mr. Edward
Davies, David T.C. (Monmouth)
Davies, Philip
Dorrell, rh Mr. Stephen
Dorries, Mrs. Nadine
Duddridge, James
Duncan Smith, rh Mr. Iain
Dunne, Mr. Philip
Ellwood, Mr. Tobias
Fabricant, Michael
Fallon, Mr. Michael
Farron, Tim
Featherstone, Lynne
Field, Mr. Mark
Foster, Mr. Don
Fox, Dr. Liam
Francois, Mr. Mark
Fraser, Mr. Christopher
Garnier, Mr. Edward
Gauke, Mr. David
Gillan, Mrs. Cheryl
Goldsworthy, Julia
Goodman, Mr. Paul
Goodwill, Mr. Robert
Gove, Michael
Grayling, Chris
Greening, Justine
Grieve, Mr. Dominic
Gummer, rh Mr. John
Hammond, Mr. Philip
Hammond, Stephen
Hands, Mr. Greg
Harper, Mr. Mark
Harvey, Nick
Hayes, Mr. John
Heald, Mr. Oliver
Heath, Mr. David
Heathcoat-Amory, rh Mr. David
Hemming, John
Hendry, Charles
Hoban, Mr. Mark
Hogg, rh Mr. Douglas
Hollobone, Mr. Philip
Holloway, Mr. Adam
Holmes, Paul
Horam, Mr. John
Horwood, Martin
Hosie, Stewart
Howarth, David
Howarth, Mr. Gerald
Hughes, Simon
Huhne, Chris
Hurd, Mr. Nick
Jack, rh Mr. Michael
Jackson, Mr. Stewart
Jenkin, Mr. Bernard
Jones, Mr. David
Kawczynski, Daniel
Keetch, Mr. Paul
Key, Robert
Kirkbride, Miss Julie
Knight, rh Mr. Greg
Kramer, Susan
Lamb, Norman
Lansley, Mr. Andrew
Laws, Mr. David
Leech, Mr. John
Leigh, Mr. Edward
Letwin, rh Mr. Oliver
Lewis, Dr. Julian
Liddell-Grainger, Mr. Ian
Lidington, Mr. David
Lilley, rh Mr. Peter
Llwyd, Mr. Elfyn
Loughton, Tim
Mackay, rh Mr. Andrew
Maclean, rh David
Main, Anne
Maples, Mr. John
May, rh Mrs. Theresa
McIntosh, Miss Anne
McLoughlin, rh Mr. Patrick
Mercer, Patrick
Miller, Mrs. Maria
Milton, Anne
Moore, Mr. Michael
Moss, Mr. Malcolm
Mulholland, Greg
Mundell, David
Murrison, Dr. Andrew
Neill, Robert
Newmark, Mr. Brooks
O'Brien, Mr. Stephen
Öpik, Lembit
Osborne, Mr. George
Ottaway, Richard
Paice, Mr. James
Paterson, Mr. Owen
Pelling, Mr. Andrew
Penning, Mike
Penrose, John
Pickles, Mr. Eric
Price, Adam
Prisk, Mr. Mark
Pritchard, Mark
Pugh, Dr. John
Randall, Mr. John
Redwood, rh Mr. John
Reid, Mr. Alan
Rennie, Willie
Robathan, Mr. Andrew
Robertson, Angus
Robertson, Hugh
Robertson, Mr. Laurence
Rogerson, Dan
Rosindell, Andrew
Rowen, Paul
Ruffley, Mr. David
Russell, Bob
Sanders, Mr. Adrian
Scott, Mr. Lee
Selous, Andrew
Shapps, Grant
Shepherd, Mr. Richard
Simmonds, Mark
Simpson, David
Smith, Sir Robert
Soames, Mr. Nicholas
Spicer, Sir Michael
Spink, Bob
Spring, Mr. Richard
Stanley, rh Sir John
Streeter, Mr. Gary
Stunell, Andrew
Syms, Mr. Robert
Taylor, Matthew
Teather, Sarah
Thurso, John
Tredinnick, David
Tyrie, Mr. Andrew
Vara, Mr. Shailesh
Viggers, Peter
Villiers, Mrs. Theresa
Walker, Mr. Charles
Wallace, Mr. Ben
Waterson, Mr. Nigel
Watkinson, Angela
Webb, Steve
Whittingdale, Mr. John
Widdecombe, rh Miss Ann
Wiggin, Bill
Williams, Hywel
Williams, Mark
Williams, Mr. Roger
Willott, Jenny
Wilson, Mr. Rob
Wilson, Sammy
Winterton, Ann
Winterton, Sir Nicholas
Wishart, Pete
Wright, Jeremy
Yeo, Mr. Tim
Young, rh Sir George
Younger-Ross, Richard
Tellers for the Ayes:
Mr. Mark Lancaster and
Mr. David Evennett
NOES
Abbott, Ms Diane
Ainger, Nick
Ainsworth, rh Mr. Bob
Allen, Mr. Graham
Anderson, Mr. David
Anderson, Janet
Atkins, Charlotte
Austin, Mr. Ian
Bailey, Mr. Adrian
Baird, Vera
Balls, Ed
Banks, Gordon
Barlow, Ms Celia
Barron, rh Mr. Kevin
Battle, rh John
Bayley, Hugh
Begg, Miss Anne
Bell, Sir Stuart
Benn, rh Hilary
Benton, Mr. Joe
Betts, Mr. Clive
Blackman-Woods, Dr. Roberta
Blizzard, Mr. Bob
Blunkett, rh Mr. David
Borrow, Mr. David S.
Bradshaw, Mr. Ben
Brennan, Kevin
Brown, Lyn
Brown, rh Mr. Nicholas
Brown, Mr. Russell
Browne, rh Des
Bryant, Chris
Burden, Richard
Burgon, Colin
Burnham, Andy
Butler, Ms Dawn
Byrne, Mr. Liam
Caborn, rh Mr. Richard
Cairns, David
Campbell, Mr. Alan
Caton, Mr. Martin
Challen, Colin
Chapman, Ben
Chaytor, Mr. David
Clapham, Mr. Michael
Clark, Ms Katy
Clarke, rh Mr. Tom
Clwyd, rh Ann
Coaker, Mr. Vernon
Coffey, Ann
Cook, Frank
Cooper, Rosie
Corbyn, Jeremy
Cousins, Jim
Crausby, Mr. David
Cryer, Mrs. Ann
Cummings, John
Cunningham, Mr. Jim
Cunningham, Tony
Darling, rh Mr. Alistair
Davidson, Mr. Ian
Davies, Mr. Dai
Dean, Mrs. Janet
Denham, rh Mr. John
Devine, Mr. Jim
Dhanda, Mr. Parmjit
Dismore, Mr. Andrew
Dobbin, Jim
Dobson, rh Frank
Donohoe, Mr. Brian H.
Doran, Mr. Frank
Dowd, Jim
Drew, Mr. David
Dunwoody, Mrs. Gwyneth
Durkan, Mark
Eagle, Angela
Eagle, Maria
Efford, Clive
Ellman, Mrs. Louise
Ennis, Jeff
Farrelly, Paul
Fitzpatrick, Jim
Flello, Mr. Robert
Flint, Caroline
Follett, Barbara
Foster, Mr. Michael (Worcester)
Foster, Michael Jabez (Hastings and Rye)
Francis, Dr. Hywel
Gapes, Mike
Gardiner, Barry
George, rh Mr. Bruce
Gerrard, Mr. Neil
Gibson, Dr. Ian
Gilroy, Linda
Godsiff, Mr. Roger
Goggins, Paul
Goodman, Helen
Griffiths, Nigel
Gwynne, Andrew
Hall, Mr. Mike
Hall, Patrick
Hamilton, Mr. David
Hamilton, Mr. Fabian
Hanson, rh Mr. David
Harman, rh Ms Harriet
Harris, Mr. Tom
Havard, Mr. Dai
Healey, John
Hendrick, Mr. Mark
Hepburn, Mr. Stephen
Heppell, Mr. John
Hermon, Lady
Hesford, Stephen
Hewitt, rh Ms Patricia
Heyes, David
Hill, rh Keith
Hillier, Meg
Hood, Mr. Jim
Hope, Phil
Hopkins, Kelvin
Howarth, rh Mr. George
Howells, Dr. Kim
Hoyle, Mr. Lindsay
Hughes, rh Beverley
Humble, Mrs. Joan
Iddon, Dr. Brian
Irranca-Davies, Huw
James, Mrs. Siân C.
Jenkins, Mr. Brian
Johnson, rh Alan
Johnson, Ms Diana R.
Jones, Helen
Jones, Mr. Kevan
Jones, Lynne
Jones, Mr. Martyn
Jowell, rh Tessa
Joyce, Mr. Eric
Kaufman, rh Sir Gerald
Keeble, Ms Sally
Keeley, Barbara
Keen, Ann
Kemp, Mr. Fraser
Khan, Mr. Sadiq
Kidney, Mr. David
Kilfoyle, Mr. Peter
Knight, Jim
Kumar, Dr. Ashok
Ladyman, Dr. Stephen
Lammy, Mr. David
Lazarowicz, Mark
Lepper, David
Levitt, Tom
Lewis, Mr. Ivan
Love, Mr. Andrew
Lucas, Ian
Mackinlay, Andrew
Mactaggart, Fiona
Malik, Mr. Shahid
Mann, John
Marris, Rob
Marsden, Mr. Gordon
Marshall-Andrews, Mr. Robert
Martlew, Mr. Eric
McAvoy, rh Mr. Thomas
McCabe, Steve
McCarthy, Kerry
McCarthy-Fry, Sarah
McDonnell, John
McFadden, Mr. Pat
McFall, rh John
McGovern, Mr. Jim
McGrady, Mr. Eddie
McGuire, Mrs. Anne
McIsaac, Shona
McKechin, Ann
McKenna, Rosemary
McNulty, Mr. Tony
Meacher, rh Mr. Michael
Merron, Gillian
Michael, rh Alun
Milburn, rh Mr. Alan
Miliband, rh David
Miliband, Edward
Miller, Andrew
Moffat, Anne
Moffatt, Laura
Mole, Chris
Moon, Mrs. Madeleine
Moran, Margaret
Morden, Jessica
Morgan, Julie
Morley, rh Mr. Elliot
Mountford, Kali
Mudie, Mr. George
Mullin, Mr. Chris
Munn, Meg
Murphy, Mr. Denis
Murphy, Mr. Jim
Murphy, rh Mr. Paul
Naysmith, Dr. Doug
Norris, Dan
Olner, Mr. Bill
Osborne, Sandra
Owen, Albert
Palmer, Dr. Nick
Pearson, Ian
Plaskitt, Mr. James
Pope, Mr. Greg
Pound, Stephen
Prentice, Bridget
Prentice, Mr. Gordon
Primarolo, rh Dawn
Prosser, Gwyn
Purchase, Mr. Ken
Purnell, James
Raynsford, rh Mr. Nick
Reed, Mr. Andy
Reed, Mr. Jamie
Robertson, John
Rooney, Mr. Terry
Roy, Mr. Frank
Ruane, Chris
Ruddock, Joan
Russell, Christine
Salter, Martin
Seabeck, Alison
Shaw, Jonathan
Sheerman, Mr. Barry
Sheridan, Jim
Simon, Mr. Siôn
Singh, Mr. Marsha
Skinner, Mr. Dennis
Slaughter, Mr. Andy
Smith, rh Mr. Andrew
Smith, Ms Angela C. (Sheffield, Hillsborough)
Smith, Angela E. (Basildon)
Smith, rh Jacqui
Smith, John
Snelgrove, Anne
Soulsby, Sir Peter
Southworth, Helen
Spellar, rh Mr. John
Starkey, Dr. Phyllis
Stoate, Dr. Howard
Strang, rh Dr. Gavin
Stringer, Graham
Sutcliffe, Mr. Gerry
Tami, Mark
Taylor, Ms Dari
Taylor, David
Thomas, Mr. Gareth
Timms, rh Mr. Stephen
Tipping, Paddy
Todd, Mr. Mark
Touhig, rh Mr. Don
Trickett, Jon
Turner, Dr. Desmond
Turner, Mr. Neil
Twigg, Derek
Ussher, Kitty
Vaz, rh Keith
Walley, Joan
Waltho, Lynda
Ward, Claire
Wareing, Mr. Robert N.
Watts, Mr. Dave
Whitehead, Dr. Alan
Wicks, Malcolm
Williams, rh Mr. Alan
Wills, Mr. Michael
Winnick, Mr. David
Winterton, rh Ms Rosie
Wood, Mike
Woodward, Mr. Shaun
Woolas, Mr. Phil
Wright, David
Wright, Mr. Iain
Wright, Dr. Tony
Wyatt, Derek
Tellers for the Noes:
Liz Blackman and
Mr. Ian Cawsey
Question accordingly negatived.
deferred divisions
Motion made, and Question put forthwith, pursuant to Standing Order No. 41A(3)(Deferred Divisions),
That, at this day’s sitting, Standing Order No. 41A (Deferred Divisions) shall not apply to the Motion in the name of John Healey relating to Off-Road Vehicles (Registration) Bill [Money].— [Mr. Watts.]
10.15 pm
Ed Balls: I beg to move amendment No. 19, page 148, line 33, at end insert—
‘( ) In section 431 of ICTA, at end insert—
“(2ZG) The Treasury may by order amend the definition of “insurance business transfer scheme” given by subsection (2) above where it is expedient to do so in consequence of any amendment of section 105 of the Financial Services and Markets Act 2000.
(2ZH) The power conferred by subsection (2ZG) above includes power to make incidental, supplementary, consequential or transitional provisions and savings (including provision amending any provision of the Corporation Tax Acts relating to insurance companies).”.’
Mr. Speaker: With this it will be convenient to discuss Government amendments Nos. 20 to 32.
Ed Balls: Schedule 9 includes a range of measures designed to simplify and clarify the tax law for transfers of life insurance business. We had a long and interesting debate on those matters in Committee. They are complex provisions and the Treasury and the industry have held extensive consultations on them over the past year. Amendments Nos. 19, 20 and 21, on transfers of business, relate to part of that consultation.
Amendments Nos. 22 to 29 apply to schedule 10. Although the schedule deals with a range of issues in insurance tax law, the amendments concentrate on only one aspect of the schedule—the treatment of structural assets, on which I wrote to the hon. Member for
Fareham (Mr. Hoban) on 5 June, following our interesting debate in Committee. Amendments Nos. 30 to 32 are consequential amendments to the repeals schedule. I shall first cover the schedule 9 amendments on transfers of business and then the schedule 10 amendments on structural assets.
Amendment No. 19 introduces a regulation-making power to enable a quick and flexible response if the regulatory legislation in the Financial Services and Markets Act 2000 changes. It allows regulations to be made amending the tax law definition of insurance business transfer scheme. The definition is important as all the legislation in schedule 9 depends on it. It is wider than the definition that applies in the Financial Services and Markets Act, because the Act allows some types of scheme where policyholder protection issues are not as relevant as in most schemes carried out without court approval. However, tax law allows those excluded schemes to get the benefit of the tax-neutral treatment given by schedule 9.
The UK has to transpose the European reinsurance directive into UK law before the end of the year. That work is being done by the Treasury, and has been developed in close conjunction with Her Majesty’s Revenue and Customs. A consultation document will be issued by the Treasury shortly and will contain draft regulations amending FSMA to take the directive into account. In recent weeks, as the regulations were being prepared at the Treasury, it became apparent that changes would be needed to tax legislation as a result, because the latest draft of the regulations will create a new class of excluded schemes for reinsurance transactions. Under the current tax law definition, such a new class of excluded schemes would not get the benefit of the tax-neutral treatment. That is not sensible, so we are introducing this power to enable the tax law to be changed in line with changes to FSMA. The method we have adopted gives us the ability to make the changes quickly, and in particular to have them in place when the regulations come into force towards the end of the year.
Mr. Nicholas Soames (Mid-Sussex) (Con): It is clear from the pace at which the hon. Gentleman is dealing with these matters that he is not only uncomfortable but unsure about what he is saying. Given that tomorrow, the architect of the destruction of the British pensions industry becomes Prime Minister, does the hon. Gentleman not think that he, as the agent of the Prime Minister-to-be, should take these provisions away, reconsider them and bring them back to the House?
Ed Balls: I thank the hon. Gentleman for that intervention. I did not know that he was an expert on the European Community reinsurance directive. If he is, and he has views on the regulations that we will produce for consultation in the coming weeks, I look forward to his submission. If he would like to meet to discuss the details, I would be happy to do so. We could meet in the House or in the Treasury. If he would like to cross the Floor of the House, we could meet as colleagues.
Mr. Soames: The hon. Gentleman clearly does not know a lot, as Opposition Members are aware. We did think that it was all Brown, but now we know that it is all Balls.
Ed Balls: I think that I might move on and get back to the substance rather than “jokes”—I think that that is the word. I enjoyed that one very much.
In response to representations received from the life insurance industry, amendment No. 20 restores a provision that was unintentionally deleted by the Finance Bill, which we therefore correct. Amendment No. 21 adjusts the regulatory powers in schedule 9 to provide the flexibility needed to deal with future representations from the insurance industry. At present, the regulatory power provided in paragraph 60 of schedule 9 applies only to transfer schemes taking place from the day to be appointed under paragraph 17, which is likely to be in spring next year.
Not all the provisions in schedule 9 start from that appointed day. One such is proposed new section 444ABD, which starts from the Budget day. Discussions with the life insurance industry on the detail of the transfers of business legislation are continuing, and proposed new section 444ABD and other earlier starting provisions might need amending as a result. I do not know whether the hon. Member for Mid-Sussex (Mr. Soames) has views on that too; if he has, I would be happy to hear them. To give the flexibility to bring in agreed changes from the earliest possible date, Government amendment No. 21 amends the regulatory power. The regulations will be consulted on extensively and will be debated in this House, as they are subject to the affirmative procedure.
Some concern has been expressed by the industry that bringing forward the date from which regulations can have effect should not be used to impose changes to tax retrospectively. It is not our intention to do that, and in any case a statement of compatibility with the Human Rights Act will have to be made in relation to the regulations.
Amendments Nos. 22 to 29 amend the part of schedule 10 about structural assets. We had a substantial debate on the issue in Committee, which focused mainly on the complex issues of capital gains and the interaction with the tax law on life assurance companies as it affects structural assets. During that debate, the hon. Member for Fareham asked me some detailed questions, and I sent him an even more detailed written reply, which I hope cleared up his questions. Since that debate, we have consulted in further detail with the insurance industry on the issues that he and others raised, and have reached agreement about what is to be done. The amendments, particularly amendment No. 26, are the result.
The other amendments to schedule 10 correct minor errors or make technical adjustments to improve definitions and to improve that section of the Bill overall. All the amendments improve the working of schedules 9 and 10, and the insurance industry is fully satisfied with them. On that basis, I commend them to the House.
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