Clause 58

Part of Finance Bill – in a Public Bill Committee at 12:00 pm on 16 June 2009.

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Photo of John Pugh John Pugh Shadow Minister (Health), Shadow Minister (Treasury) 12:00, 16 June 2009

I thank the hon. Gentleman for that useful lesson. I shall now test my understanding of this fairly complex schedule and clause.

As I understand it, it is intended that manufactured overseas dividends will qualify for exemptions from double taxation, as real dividends do. Manufactured overseas dividends are characteristics, as the hon. Gentleman has said, of repo deals. I believe that the scam to be targeted involves one might call an illusory repo deal between two companies in the same group—phantom dividends, an allowance for foreign tax liability but no actual foreign tax liability. If I am correct that that is what the Minister wishes to target, my only question is: how prevalent is the scam and what are the savings to the Exchequer in closing that loophole?