Clause 33 - Trustees both resident and non-resident in a year of assessment
Finance Bill
11:30 am
John Healey (Financial Secretary, HM Treasury; Wentworth, Labour)
Perhaps I can take my hon. Friend’s point as an early Budget representation and leave it at that.
The hon. Member for West Suffolk pointed out—and, I think, accepted—that for many moves to counter tax avoidance it does not make sense to offer prior notice. The clause does not contain what I would regard as retrospective legislation. It takes effect from the Budget date on which it was announced. How it would work was clearly spelt out at that time in a Budget notice. We published the draft legislation in the first Finance Bill and prior to the election we made it clear that if we were re-elected, we would reintroduce the provision. We have done that.
The hon. Gentleman is concerned about trustees who might be caught, as he put it, for “innocent” actions. That follows on from what I have just said; the measure will apply only to disposals made by trustees on or after 16 March, which was Budget day. We have made our intention to proceed with the legislation clear. Therefore, trustees were in a position to know the potential effect of the measure if they changed residence after Budget day. I am sure that they accept, and take seriously, their responsibility to consider carefully any effects of their actions on the beneficiaries.
Although the hon. Gentleman was not very direct about it, I think that he referred to the general review of residence and domicile provision. Once again, we made that matter quite clear in the Budget. We are continuing that review and continuing to review the rules as they affect the taxation of individuals. We are keen to proceed on the basis of evidence and we will do so. We welcome further contributions to that process, including those from the sort of trustees with whom he might have been in contact. We plan to take the process forward with the publication of a consultation setting out the possible approaches for reform.
In the meantime, the measure does not pre-empt that review and it has provoked an interesting reaction from some of the specialists in the field. BDO Stoy Hayward remarked:
“These measures do not come as a surprise given that over the past couple of years the authorities have sought to renegotiate some relevant DTAs to give the UK taxing rights on gains.”
I have explained why that approach was too slow and allowed, in the meantime, those who were keen to continue their tax avoidance to switch their attentions to other countries. On that basis, I hope that the Committee accepts the clause.