Clause 37
Finance Bill
12:15 pm
Edward Balls (Economic Secretary, HM Treasury; Normanton, Labour)
In a moment, we are going to debate a series of detailed amendments to schedule 7, which have been—and still are—the subject of consultation. With your permission, Mr. Gale, I will respond to the point about the consultation when we discuss the detail of that schedule.
The broader point that the hon. Gentleman makes is absolutely right. When I participated in debates on the previous Finance Bill a year ago, we stressed the importance of consultation in the area of life assurance and insurance company business, especially given the difficult set of events in autumn 2005. It was generally acknowledged that while some necessary decisions had been made to deal with central tax avoidance, in retrospect, the consultation could have been more effective. As a result of the work that started at that point, we have undertaken extensive consultation in that area.
Last May, Her Majesty’s Revenue and Customs published a consultative document on various technical aspects of the special corporation tax rules that apply to insurance. People who have studied the consultation documents and the legislation will understand that that is a very complex area of tax law. In the 12 months since then, working groups made up of industry representatives, professional advisers, and HMRC officials have discussed at length various options for changing the life assurance company tax framework. The working group set out to identify and discuss areas of the regime that could be simplified, clarified or improved. They embraced policy options and detailed technical solutions and then the detailed consultation on the draft legislation. Therefore, the measures that we are debating both here and under schedule 7 and later schedules and clauses reflect the detailed consultation that has been conducted in a constructive spirit.
From a tax point of view, it was our intention that the outcome of the consultation on the changes would be broadly neutral. Although that is not true for every measure across the piece, this is not a tax-cutting or tax-raising exercise. Consultation work is continuing to which I shall refer later. As the hon. Gentleman said, the ABI has provided considerable time and resources, as have many other industry practitioners.