Clause 67 - Expenditure involving crime
Finance Bill
6:00 pm
Ms Ruth Kelly (Financial Secretary, HM Treasury; Bolton West, Labour)
I want to thank the Liberal Democrats for expressing their strong support for the clause. I take the constructive comments made by the hon. Member for Arundel and South Downs in the same spirit. He asked some technical questions about implementing the clause, rather than questioning its validity.
The clause corrects a technical anomaly in the tax rules on bribes and corrupt payments, to make it clear beyond doubt that tax relief is not available for bribes.The existing law denies a business tax deduction on any expenditure that constitutes an offence in the United Kingdom--in other words, if it is a criminal bribe. That virtually covers all the circumstances in which a United Kingdom tax-paying business might pay a bribe.
However, there is one unusual set of circumstances in which it is theoretically possible for a business in the UK tax net to pay a bribe without committing an offence in the UK. That is where a non-UK national in an overseas branch of a UK company pays a bribe and does not report that bribe to the UK head office. No offence is committed in the UK because there is neither a knowing mind in the UK, nor a UK national directly involved in the payment. Such instances will be rare and there is no evidence that there is a problem in practice, so I can tell the hon. Member for Torridge and West Devon (Mr. Burnett) that we are correcting a technical anomaly in tax law. We already have a system in which, by and large, bribes are not tax-deductible in the UK, and we are not making a major change that will impact on UK business.