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Chapter A1 of Part 14 of ITA 2007 (remittance basis).
No. 76, page 203, line 37, leave out from purposes of to end of line 38 and insert
Chapter A1 of Part 14 of ITA 2007 (remittance basis).
No. 77, page 206, line 20, leave out from purposes of to treat in line 21 and insert
Chapter A1 of Part 14 of ITA 2007 (remittance basis),.
No. 78, page 207, line 25, leave out from if to transfer in line 28 and insert
the trustees of a settlement (the transferor settlement).
No. 79, page 212, line 38, leave out paragraph 124.
No. 80, page 223, line 1, leave out from purposes of to end of line 2 and insert
Chapter A1 of Part 14 (remittance basis).
No. 81, line 7, after to, insert (or exceeding).
No. 82, line 41, leave out from purposes of to treat in line 42 and insert
Chapter A1 of Part 14 (remittance basis),.
No. 83, page 224, line 18, leave out from purposes of to treat in line 19 and insert
Chapter A1 of Part 14 (remittance basis),.
No. 84, line 40, leave out from purposes of to treat in line 41 and insert
Chapter A1 of Part 14 (remittance basis),.
No. 85, page 225, line 9, after gains, insert or offshore income gains.
No. 86, line 45, at end insert
(4A) For those purposes treat income for a period as arising immediately before the end of the period..
No. 87, page 226, line 2, at end insert
172 For the purposes of this Part of this Schedule, the market value of any asset is its market value for the purposes of TCGA 1992.. [Jane Kennedy.]
Amendment proposed: No. 30, page 270, line 35, leave out from beginning to and in line 36. [Kitty Ussher.]
Madam Deputy Speaker: With this it will be convenient to discuss Government amendments Nos. 31 to 33.
Mr. Hoban: Will the Minister clarify the interaction between the returns that insurance special purpose vehicles are required to supply under the Financial Services and Markets Act 2000 and the tax burden? The explanatory notes almost suggest that the taxation is driven by forms. I am sure that that is not meant to be the case, but I should be grateful if the Minister commented on it.
I am pleased to see that the Government have tabled amendment No. 33. The issue caused significant concern among all parties in Committee. By attempting to amend the Bill, the Government appeared to move to deal with a tax case that was in progress, so it is good that the Treasury has recognised the importance of the case continuing and working its way through. I know that that was welcomed by those concerned with the case.
Kitty Ussher: I thank the hon. Gentleman for those remarks. I am obviously sorry that we were not able to introduce the amendments in Committee, but we were able to engage fully with the company concerned only after Committee. That has led to the clarifying amendments before us, with which I understand the company is completely happy, so I hope that we are all square on that.
Amendment No. 32 would introduce the power to allow tax rules to be made by Treasury order for a small and specialised class of insurers in respect of insurance special purpose vehicles. I did not pick up the precise point that the hon. Gentleman made, so if he would like to intervene now, I shall try again.
Mr. Hoban: I was just concerned about the flavour of the explanatory notes regarding the interaction between the regulatory returns that life assurance companies make and the basis of taxation. The issue, which I think came up in the proceedings of the previous Finance Bill, or it may even have been during the Finance Bill before that, is the way in which reserves are classified in the Financial Services Authoritys forms and so on. The explanatory notes were not entirely clear about how the FSAs returns interacted with the taxation of life assurance companies, and I just wanted confirmation that tax is not being driven by the FSAs regulatory returns.
Kitty Ussher: I can clarify that. That particular class of special purpose vehicles does not have to make returns to the FSA, which is why we need the set of rules that we will introduce through secondary legislation very soon.
Amendments made: No. 31, page 271, line 14, after period, insert
and distributions received by the company in the accounting period from companies resident in the United Kingdom so far as
referable (in accordance with section 432A of the Taxes Act 1988) to the companys basic life assurance and general annuity business.
No. 32, page 272, line 8, at end insert
Insurance special purpose vehicles
19A In section 431A of ICTA (powers to amend), after subsection (2) insert
(2A) The Treasury may by order make provision as to the application of the Corporation Tax Acts in relation to insurance special purpose vehicles.
(2B) An order under subsection (2A) above may in particular contain provision
(a) making amendments of any provision of the Corporation Tax Acts, or
(b) making provision for the life assurance provisions of the Corporation Tax Acts to have effect in relation to any specified description of insurance special purpose vehicles subject to specified modifications or exceptions.
(2C) An order under subsection (2A) above
(a) may make provision having effect in relation to accounting periods current when it is made, and
(b) if it is made in consequence of, or otherwise in connection with, provision made by any enactment or instrument, may make provision having effect in relation to the same times as that enactment or instrument..
No. 33, page 275, line 31, at end insert
(3) But that amendment does not have effect (and is to be treated as never having had effect) in relation to a company if a relevant determination is made in proceedings commenced by the company before 15 May 2008 and is not reversed on an appeal or further appeal.
(4) A relevant determination is a determination that losses incurred in an accounting period earlier than that in which 31 December 2002 was included are to be taken into account for the purposes of section 89 of FA 1989 in arriving at Case I profits for accounting periods
(a) beginning on or after 1 January 2003, and
(b) ending on or before 31 December 2006.. [Kitty Ussher.]
Jane Kennedy: I beg to move, That the Bill be now read the Third time.
Will you pass on my thanks, Madam Deputy Speaker, to the Chairman of Ways and Means and to all the Chairmen who helped us in Committee? I should like to thank all Members who participated in Committee of the whole House, in Committee, and on Report over the past two days. They have closely scrutinised the major changes to our tax system that the Bill introduces. I also pay tribute to the Opposition parties spokesmen and women, who have been extremely well briefed and meticulous in their pursuit of the detail. Although my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) is not in his place, may I say that he was missed by Finance Bill regulars? However, we were grateful for his contributions on the Floor of the House.
The Bill supports our economy. Like the rest of the world, we are facing a tough time. The ongoing disruption to global financial markets and rising world food and fuel prices are international trends, but are having an impact in all areas of Britain. The rising price of oil is raising the cost of filling up the car and of gas and
electricity bills, which have risen by more than 15 per cent. and more than 12 per cent. respectively in the past 12 months. The price of some staple foods has gone up even more steeply.
However, our economy is well placed to respond to those challenges. Although inflation is rising, it is lower than in the USA or the eurozone and remains far lower than it was in the past; the same applies to interest rates. The UK has also benefited from more than 15 years of continuous growth and from 10 years in which income per head has risen faster than in any other country in the G7, taking us from the bottom of the table to second from the top. Crucially, there are now 3 million more people in work than there were in 1997. Employment is at a record high.
We need to support families and businesses at this time, so the Bill delays the introduction of the fuel duty rise that was due to have taken place in April, as was discussed earlier this evening. The Bill also raises personal allowances for this year. We continue to look at the best way to continue to support those on low incomes in the future. My right hon. Friend the Chancellor has said that he will introduce proposals to do that at the pre-Budget report. We will continue to support families, but we also have to support Britains businesses and to ensure that Britain remains a competitive place in which to do business.
I need to mention a minor technical matter relating to the reduction in the rate of corporation tax. Owing to an unintended oversight, the rules for giving double taxation relief on foreign income did not get altered to reflect the reduction in the corporation tax rate. If that were uncorrected, some companies could face double taxation on a small part of a number of dividends received during this financial year. This technical matter obviously needs to be rectified. HMRC will discuss the solution with business representatives to find the best possible fix. We will then address the problem in next years Finance Bill, with provisions backdated to 1 April 2008 to ensure that no income faces double taxation. In the meantime, HMRC will use its statutory discretion to give the necessary double taxation relief.
Capital gains tax is being restructured and made significantly simpler, with an internationally competitive main rate of 18 per cent.less than half what it was 10 years ago. The entrepreneurs relief that the Bill introduces will benefit 80,000 business owners and investors this year alone. The Bill also maintains the competitiveness of the UKs tax system for non-domiciles; the system is being made more sustainable because we are ensuring that the principle of paying tax only on income remitted here is not exploited or undermined. We are responding to the challenges that our economy faces and we are supporting families and businesses.
The Bill addresses the challenges that the British economy faces. As I said, it supports British business and families, and I commend it to the House.
Mr. Philip Hammond:
May I say how disappointed we Conservatives are, not only because the Chief Secretary did not have time to join us in Committee, but because she has not, apparently, had time to make the Third Reading speech tonight? However, I congratulate the Financial Secretary and her spokeswomenI do not
have to say spokesmen and spokeswomen on this occasionon how they handled the Bill through some complicated Committee sittings. They have always been well briefed and they have nearly always been good humoured. I congratulate the Financial Secretary on her performance.
I am afraid that I cannot say the same about the Bill itself. It all started with the pre-Budget report last October, and what a lot of water has passed under the bridge since then. We have had the cancelled election, discgate, the credit crunch, the nationalisation of Northern Rock, the soaring cost of living and the stalling of economic growth. The Prime Ministers stock has hit record lows and the Chancellors pre-Budget and Budget packages have fallen apart.
Britain is a less self-confident place than it was last October. What people want in these difficult times is a strong Government who are clear of purpose, united around a long-term strategy, and competent in delivery. What they have is a disunited, indecisive, incompetent Government, whose failures in managing the British economy during the good years are now being paid for by the British people. The Government have become so distracted by their own problems that they have missed the opportunities that the Bill offered. They are so busy fighting each other that they have not had time to fight for Britain.
There has never been an occasion on which a Government have had to surrender so comprehensively on their keynote financial legislation. Never in my memory has a Finance Bill grabbed the newspaper headlines in the way this one has done. First, there was the abolition of the 10p rate. We went from receiving a prime ministerial insistence that there were no losers to the announcement of a £2.7 billion compensation package for 4.2 million of them in just a few weeks. However, there is still no answer to the plight of the remaining 1.1 million people, and no confirmation of the treatment, next year and the year after, of personal allowances and additional winter fuel payments for the lucky 4.2 million. It was never clear to me why it is apparently possible to announce a solution for those 1.1 million people only in the pre-Budget report, but eminently possible to announce a solution for the other 4.2 million people in the middle of the Crewe and Nantwich by-election campaign. When short-term political interest demanded it, the Government re-opened the Budget that they said could not be re-opened, and found money that they said they did not have.
Next there was the humiliating climbdown on capital gains tax. Faced with a united outcry from the business community, and seeing his base of business support disintegrating, the Prime Minister ordered a U-turn, picking off the largest business lobby with a watered-down retirement relief for small businesses. However, that did not work, and the retirement relief that business really wants today is the relief that the Prime Ministers retirement will bring for all of us.
There was also the non-dom climbdownthe retreat from the proposals spelled out in the pre-Budget report. That retreat was executed with all the finesse that one would expect of a great, clunking fist, and the Government achieved the worst of all worlds. They have alienated the non-dom community and have undermined its confidence in the future and they have managed to raise £100 million less from the whole exercise than they said they would.
I could go on and mention the foreign profits tax regime and the income-splitting rules, both of which were cancelled. The common theme is of short-term political calculation overriding long-term principle. The man whose decision not to hold a general election was not at all influenced by the opinion polls has managed the tax agenda for short-term political advantage, not long-term fiscal stability. That is the very opposite of the long-term decisions about which the Prime Minister used to boast.
What we needed was a Finance Bill that would begin to repair the damage done to Britains reputation and tax competitiveness over the past few months. Instead, the Government are focused on digging themselves out of their own difficulties and trying to save their skin. They never learn; instead of taking the lifelines that they have been offered on vehicle excise duty, they have insisted on enshrining son of 10p in the form of the delayed road tax rises for next April, which is probably a month or so before the county and European elections, and the following April, which will probably be a month or so before a general election. They will do another U-turn on vehicle excise duty, and they just have not had the guts to own up to it today. Labour Back Benchers have tasted blood, and fiscal policy is no longer under the control of the Chancellor. The question is not if, but when, they will force that change. Will it be at the pre-Budget report, or will they bide their time until next spring?
The Bill goes on to extend the powers of the tax authorities to enter premises and seize material on an unprecedented scale. It raises the tax rate on small companies and road tax on 80 per cent. of cars by 2010. It penalises responsible drinkers with unfair excise duty rises, clobbers businesses with £500 million of extra capital gains tax and scraps agricultural and industrial buildings allowances. But still, after all those measures, it fails to deliver relief to the 1.1 million losers from the 10p fiascoamong the lowest earners in our society. This will go down in history as the 10p Finance Bill, and those 1.1 million losers will be a lasting reminder of this Prime Ministers abandonment of principle and conviction to political calculation. I urge my hon. Friends to record our rejection of that approach and of the Bill by voting against its Third Reading.
Mr. Jeremy Browne: Thank you, Mr. Deputy Speaker, for calling me to make a few closing remarks at the end of what has been a legislative marathon and, on many occasions, an oratorical feast, as we have just heard from the hon. Member for Runnymede and Weybridge (Mr. Hammond). According to him, not a single calculation that the Government have made has not been a cynical calculation, not a single principle that he holds is not a deeply held principle, not a single climb-down performed by the Government has not been a humiliating climb-down, and every single policy brought forward by Ministers has, at one stage or another, unravelled. An amazing array of oratorical treats has been laid before us. Most of all, we have heard on many occasions that the Government should have fixed the roof while the sun was shiningan entirely appropriate policy from the party of Thatcher, showing how much the Conservatives remain in hock to their heroine.
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