Clause 78 - Attribution of gains of non-resident companies
Finance Bill
10:45 am
Ms Dawn Primarolo (Paymaster General, HM Treasury; Bristol South, Labour)
I do not have the specific figure to hand. The anti-avoidance provisions last year resulted in substantial revenues—extremely large figures. We do not believe that a motive test is necessary. If a motive test were included, it would offer an opportunity to plan again and would completely undermine our attempts last year. Our arrangements would be nullified by the creation of different routes to avoid tax, and a similar amount of revenue would be at risk. Specifically, we are discussing a gain that should be taxed.
I know that I do not have an indication of the amount in the papers that I have with me, but if there is some way of quantifying it—I doubt it—I will let the right hon. Gentleman know. He has been robust and clear both in Committee and when he was Financial Secretary in the previous Government that avoidance is unacceptable. Anti-avoidance is a tool that the Government must use.
The purpose of amendment no. 38 is to increase the period in which the distribution of a gain can be made after the gain arises, in order for credit to be given for tax charged on the gain against the tax charged on the later distribution. The amendment seeks to increase the period from three to six years from the end of the accounting period in which the gain accrued. The amendment is another example of where we give the Opposition an inch and they want a mile.
In our view, the relaxation—it is a relaxation—that we are proposing hits the right balance. It goes further than the recommendations that were made in the Government's review. For example, the CBI—I believe that Opposition Members would accept that it is a group that represents business—suggested two years from the end of the accounting period of a non-resident company. We think that that might be a little tight in some cases and propose to take it further. To my knowledge, the only specific representation that was made about the number of years actually requested only two years; we are providing three.