Offshore Receipts in Respect of Intangible Property

Part of Finance (No. 3) Bill – in the House of Commons at 4:00 pm on 20th November 2018.

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Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General 4:00 pm, 20th November 2018

That is a very good question. In the case of the digital services tax, we are no so much talking about intangible assets, although elements of the Bill—indeed, clauses in this group—relate to ensuring that profits are not artificially shifted as a result of money being moved around in respect of such assets. Here we are talking more about digital platforms, and a particular method of value creation that results from the interaction of UK users with those platforms. However, in terms of intangible assets and intellectual property we might think, for example, of the rights of a particular business based in the UK to carry on business using the branding, know-how and knowledge of a particular piece of intellectual property held in a low or no tax jurisdiction. Any royalties moved from the UK out to that low or no tax jurisdiction will be a form of profit shifting that might be artificial and simply designed to reduce a corporation’s tax bill, which is why we have particular measures in this Bill to address exactly that situation.

As I have said, this investment is paying off. In 2017-18 alone, we raised an additional £30 billion. When individuals have engaged in tax avoidance, we have brought in a variety of important measures, including to tackle the way in which some people structure their affairs for the purpose of avoiding tax, and to deal with cases of aggressive tax avoidance, such as disguised remuneration, which is being addressed by the loan charge.

Along with effective collection, we are determined that taxes themselves should be as low as possible, and the House will note the reduction in corporation tax and income tax that this Government have delivered. Our increases to the personal allowance took 4 million of the lowest paid out of income tax entirely between 2010 and 2015, and a further 1.74 million people will be taken out of tax by 2019-20.

Collectively, our approach and the measures set out in the Bill ensure that taxation in our country is competitive, fair and paid. The Bill shows our continuing commitment to crack down on tax avoidance and evasion wherever we find it.