Clause 75
Finance (No. 2) Bill
4:45 pm
Dawn Primarolo (Paymaster General, HM Treasury; Bristol South, Labour)
I agree with the hon. Lady that the need for the provision is regrettable. That is particularly so given that the Bill also contains tax credit provisions that she has acknowledged are better suited in directing money to those engaged in production, rather than to high-value individuals who are not connected to production and who are simply looking for a tax-saving scheme.
The change was needed because the schemes were particularly aggressive: sale and leaseback occurred over a 15-year period and it was necessary to ensure that tax was paid over the rest of the period. Her Majesty’s Revenue and Customs became aware that the schemes were being marketed aggressively and the likely exposure, had we not taken steps, would have been substantial. I am sure that the hon. Member for Chipping Barnet (Mrs. Villiers) can imagine my delight in finding that I had to have yet another arrangement under the Finance Bill in respect of films. It has been challenging for all hon. Members who want to assist particular technological abilities and the developments in the film industry for such matters to be based in the United Kingdom where we have great skills. There also comes a point when we must question for what the tax relief is providing.
As for the question posed by the Law Society, 40 per cent. is not an arbitrary figure. HMRC approached the matter by undertaking a detailed study of standard sale and leaseback structures. It gave it a reasonable approximation of the position that investors would be in had they invested in such structures in a straightforward way. The figure of 40 per cent. was therefore chosen as a proportionate response to that particular type of aggressive tax plan. It was simply trying to squeeze out aggressive tax planning. Such matters will never be an exact science, but it was an attempt to deal with the avoidance while not hitting other forms of sale and leaseback. I hope that hon. Members are satisfied by my clarification of matters.