Clause 38
Finance Bill
4:30 pm
Mark Hoban (Shadow Minister, Treasury; Fareham, Conservative)
I beg to move amendment No. 81, in clause 38, page 18, line 33, at end insert
‘or otherwise altering or amending the definition of an interest in an offshore fund and the circumstances in which an investor is treated as disposing of an interest in an offshore fund’.
The amendment is relatively straightforward. Clause 38 is an enabling clause and will allow the Government, through statutory instruments, to establish the new offshore funds regime. I shall return to that on clause stand part. The process set out in subsections (4) and (5) requires that the first statutory instrument, creating the new regime, must be dealt with by the affirmative procedure. We welcome that level of parliamentary scrutiny. However, subsequent statutory instruments will be dealt with by the negative procedure. Having spent some time talking about the rights of Parliament, I shall not discuss the relative merits of the affirmative and negative procedures, but I do want to highlight an issue that one representative body has raised.
In the amendment, we accept that the negative procedure should be used for subsequent changes to the initiating instrument, if that is the right word, but we suggest that changes to the core definition of circumstances in which an investor will be taxed on offshore funds should be dealt with by the affirmative procedure. That definition is at the heart of the changes to the rules on offshore funds, and there should be proper legislative scrutiny of changes to it.
The draft instrument with which the Minister kindly provided the Committee contained significant parts about administrative arrangements, including on the provision of written information to Her Majesty’s Revenue and Customs, the inquiries that HMRC can make into a reporting fund and breaches of reporting fund requirements. Those are all important, but we accept that it might be appropriate for them to go through the negative procedure. However, we believe that a substantive change to the rules on offshore funds should go through the affirmative procedure. The amendment is intended to carve out that core definition and ensure that it continues to be dealt with through the affirmative process.