Clause 28
Finance Bill
1:15 pm
Julia Goldsworthy (Shadow Chief Secretary To the Treasury, Treasury; Falmouth and Camborne, Liberal Democrat)
I shall be brief, because there is consensus on this matter. The Association of British Insurers welcomes the clause as a targeted anti-avoidance measure that has been introduced after it was informally consulted. The Chartered Institute of Taxation said that the proposed changes appear reasonable, and the Institute of Chartered Accountants for England and Wales said:
“We understand and support measures to counter tax avoidance”.
There is a recurring theme of concerns about the complexity of the provisions, however. Both the Chartered Institute of Taxation and the Institute of Chartered Accountants for England and Wales suggested that the complexity reflects the wider need for a process of corporation tax reform. In particular, the ICAEW said:
“It would have been more comprehensible to have made a fresh start and for the existing legislation to be replaced by a better targeted alternative, preferably in Tax Law Rewrite style. We would welcome a commitment that these provisions are reworked at an earlier stage to make them more comprehensible.”
I wonder whether the Economic Secretary has any comments in response to those suggestions.
During the consultation process and at the Finance Bill open day, the Chartered Institute of Taxation highlighted circumstances in which genuinely commercial transactions could be caught, such as those in which commission has been waived or where there is a professional obligation not to take commission. HMRC agreed to examine cases of individuals who have taken out a policy with the intention of drawing down not more than 5 per cent, but whose circumstances have changed with regard to their care, for example, and whose costs have increased by more than 5 per cent. They then suddenly find themselves having to draw down more than 5 per cent. The question is whether there should be a motive test to distinguish people who try to avoid tax from those who may inadvertently be caught in such a situation.