Clause 35
Finance Bill
12:30 pm
John Pugh (Southport, Liberal Democrat)
I rise to be constructive about clause 35 and the schedule that follows. It seems to be about the understanding of complex companies and their financial footprint. That is highly desirable. It ensures that profits are appropriately taxed and placed. It ensures that parent companies are identified. It is not always easy to find the parent company of a subsidiary. It is also mindful of the need to avoid double taxation. It is an exceptionally difficult area. The difficulty is well illustrated by the number of Treasury amendments that have appeared since the legislation was put before us. It also seems to me to be about an area on which most of us cannot directly comment. It is highly technical. Schedule 15 refers to things such as staple companies and stranded deficits. It also incorporates a fair amount of algebra, which other Members may be able to explain, but I certainly cannot.
It is also fundamentally about imposing international accountancy standards fairly rigorously, which I welcome. That is a recipe for business efficiency. People talk about tax efficiency as though it is the same as business efficiency, but when companies such as Amazon export things to Jersey in order to import them back into the country, one realises that the pursuit of tax efficiency can be quite different from efficient business practice.
The arguments and concerns with clause 35 are ones that we will hear in connection with any clause of this nature. People always talk about compliance benefits and capital flow. Those arguments are used so often that it is almost like crying wolf. One wants to know whether there is any credibility attached to the complaints here. It seems that some of the more vocal people voicing these concerns are those who are prepared to pay huge sums of money on tax advisers. Surely that could go some way towards meeting the client’s costs.