Clause 30
Finance Bill
10:45 am
Mark Hoban (Shadow Minister, Treasury; Fareham, Conservative)
I think that the debate on this group of amendments will proceed along similar lines to the previous debate. The rules affecting enterprise management incentive schemes are being amended through clause 30 with the introduction of a new test for qualification—an employee number test. That test will join a series of other tests set out in part 3 of the Income Tax (Earnings and Pensions) Act 2003, which deals with issues such as independence, having only qualifying subsidiaries, a gross assets test, and ensuring that businesses do not engage in excluded activities, which are listed in that provision. They are principally activities involving investment in significant property assets and real assets, whether intangible or tangible; financial services; and facilities management. I suspect that at the end of our proceedings coal, ship-building and steel will also be excluded. The amendments to clause 30 will introduce a further test to enable companies to qualify, requiring them to employ fewer than 250 full-time equivalent employees.
The Minister has set out the process that led to the introduction of that requirement, but it would be helpful for the Committee to understand why the magic number is 250 and not a lower or higher number. Unlike amendments in the previous group, there is no cross-reference to the relevant Council regulation or document to support that 250 cut-off. It would therefore be helpful if the Minister would explain where that requirement came from.
A couple of points of detail have emerged from representations that have been made to members of the Committee on clause 30. The Institute of Chartered Accountants has suggested that there should be guidance on who would need to work full-time and part-time so that businesses, when calculating full-time equivalents have some understanding of what rules should apply. Does that mean a 40-hour week or a 35-hour week, and does it mean that someone who works 20 hours a week is working half a week or two thirds of a week? Some indication from Her Majesty’s Revenue and Customs on that issue would be helpful.
The ICA has also suggested that, for completeness, those on adoption leave should be discounted alongside those on paternity and maternity leave when calculating the 250 figure. Because of the difficulty in calculating the number of full-time equivalents, it has asked whether HMRC will disregard minor breaches where it is evident that the company has taken reasonable steps to comply with the new requirements.