Clause 32
Finance Bill
12:00 pm
Angela Eagle (Parliamentary Secretary, HM Treasury; Wallasey, Labour)
The clause deals with associated company rules, and I welcome the hon. Gentleman’s support for the simplification process. Associated company rules provide a range of anti-avoidance protection measures within the corporation tax regime. For the purposes of claims for small companies rate, they do that by preventing directors or shareholders from fragmenting business activities in order to qualify artificially in some ways for reliefs that were not intended, an issue that we have talked about before.
The clause amends associated company rules to make it easier to establish the number of other companies with which a company is associated, thus removing a potential cause of undue compliance burden. That is brought into effect, as the hon. Gentleman has rightly identified, by the changes to companies rules that allow for much larger partnerships—sometimes of more than 1,000. Clearly, it is not viable to expect a run-down on partnerships of 1,000 by one person and for that person to have detailed knowledge of all the holdings of the other partners in a way that perhaps happened in the past when partnerships were smaller.
The provision is the first of what we hope will be a series of simplifications. The hon. Gentleman referred to another area and further meetings will be scheduled to see how we can simplify the associated companies rules further. The matter is complicated. The stakeholders with whom we are engaging know and admit that it is complex. We are continuing to engage with them and we hope that further changes and simplifications in other areas, hopefully along the same lines, will come out of our discussions. With that reassurance, I hope that the Committee agrees that the clause should stand part of the Bill.