Clause 37
Finance Bill
6:15 pm
Stephen Timms (Financial Secretary, HM Treasury; East Ham, Labour)
Clause 37 introduces schedule 17, which removes the existing Treasury consents legislation—dating from 1951—and replaces it with a modernised post-transaction reporting requirement. The existing rules are out of date and are not in line with current business practice. We are committed to having information available for the detection and countering of tax avoidance. There is absolutely no weakening of our resolve on that front, which is reflected here, and which I will set out perhaps in more detail when we debate the amendments tabled by the hon. Member for Southport.
We want to maintain a corporate tax regime that keeps pace with how businesses operate today, so the new reporting requirement will apply only to material from transactions that pose a significant risk of tax avoidance, with a value in excess of £100 million. That will give HMRC the information that it needs to detect tax avoidance, and, as we will discuss when we come to those amendments, by targeting the report the administrative burden for businesses is reduced.
The new rules remove the need to apply to the Treasury before entering into commercial transactions. That decision will be left to businesses, making it easier for them to operate. The administrative burdens will be significantly reduced by introducing the £100 million threshold, reducing the number of reportable transactions and reducing the amount of information that needs to be reported.
We are also removing the rather outdated criminal penalty that was attached to the Treasury consents rules. In response to representations, we have extended the exclusions to include a number of the general consents that are available in the Treasury consents rules. The draft legislation published in December included a number of exclusions from the new reporting requirement in addition to the de minimis limit of £100 million and in the consultation it became clear that without additional exclusions, the rules could generate reports that were of little value to HMRC. We have added a number of further exclusions to the draft regulations, which are essentially a replication of the existing general consents—although we have removed some of the more dated elements.
In drafting the regulations, we have deliberately copied the language because it is already familiar to businesses and, together with a new exclusion for cash pooling arrangements, these measures will address the concerns expressed about recurring transactions. The draft regulations will be published on the HMRC website. In that way, we have both provided the safeguards against avoidance, which were rightly of concern to my hon. Friend the Member for North-West Leicestershire, the hon. Member for Southport and, I imagine, to Conservative Members, while significantly easing the regulatory burden on businesses in a helpful way. We have got that balance right, and I hope that the Committee as a whole will work on that.