Angela
Eagle: Of course, part of the thinking behind the change
in investment allowances in general, of which this is a part, is to
align behaviour more with the economic costs in riding down particular
investments. Will he comment on his own party’s proposals in
this area? Capital allowances are cut in order to fund changes in
corporation tax, and that leads to a situation where there are tax
disadvantages to investing, as it takes the tax allowances that are
given in those circumstances below the economic cost of making the
investment.
Mr.
Hammond: It would be accompanied by a substantial
reduction in the headline rate of corporation tax. The other point is
that our proposals will be presented in the manifesto at the next
general election.
The
Chairman: Order. We are gathered here today in order to
make progress on the Finance Bill, not to start sparring about election
time. The Minister should have had more sense than introduce
it.
Mr.
Hammond: Thank you, Mr. Cook, I shall attempt
not to respond to provocation. The Minister sought to be helpful in
explaining how the shared premises test would work. I am still
concerned, although somewhat reassured because where one business is
functionally run and performed in a premises and another is merely
administered from it, it should not be caught by the shared premises
test.
Angela
Eagle indicated assent.
Mr.
Hammond: The Minister nods her head, so that clears that
up. We are still concerned about the mixed partnership rules. She says
that there is substantial scope for abuse, and implies that I know what
that scope is. I am sorry to disappoint her, but I do not know what the
scope for abuse is—I have been racking my brains trying to think
about what mischief one could get up to. She has not addressed the
point that the Government have a clear policy of similar treatment for
similar economic activity regardless of the legal structure and we are
disappointed that she was not able to deal with that.
In relation to ownership, of
course it was never intended that double claims of allowances should be
made; we were merely seeking to understand why that additional
condition had to be introduced into the schedule.
Amendment
negatived. It
being One o’clock, The Chairman
adjourned the Committee without Question put, pursuant to the Standing
Order. Adjourned
till this day at half-past Four
o’clock.
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