Clause 30
Finance Bill
11:15 am
Mark Hoban (Shadow Minister, Treasury; Fareham, Conservative)
The Minister is correct about the importance of striking the right balance between creating incentives for legitimate activity and encouraging tax avoidance. That underpins much of part 3 of the Income Tax (Earnings and Pensions) Act 2003. However, we must be careful not to get sucked into too rosy a view of private equity and venture capital. Before coming to the House, I had experience of working with people who have been backed by private equity and venture capital companies. They would not have argued that they were well rewarded by their backers. The money invested is capital for them to expand the business, not to pay the management fancy salaries, particularly at the smaller, higher-risk end. Boots and the Automobile Association are very different from the companies able to qualify under the tests, which have gross assets of less than £30 million and fewer than 250 employees. In such companies, many are paid low—if any—wages because their venture capital backers want to see them invest in growing the business, not in fancy cars and flash offices. We should not fall into the trap of thinking that their life is easy or that the money from the backers is on tap.