I am grateful for the opportunity to speak to this group of amendments and I appreciate the probing nature in which they were tabled and introduced by the hon. Lady. The issue being raised is about whether the proposed changes in the Bill might not go far enough to ensure EU compliance. That view is not shared by the Government. Broadly, our position is clear: direct tax policy is a matter in respect of which individual EU member states have sovereignty over their own regimes, but we accept that that sovereignty must be exercised in a manner consistent with EU law, including the fundamental freedoms. The Government are clear that the legislation should be sufficient to comply with EU law, but go no further.

The amendments seek to go further than what we believe is necessary to comply with EU law. They seek to extend the scope for consortium relief claims to be made. First, the changes would allow claims whenever a link company was resident, which goes beyond the requirement that a link company must be UK-related or established in the EEA.

Secondly, they would remove the requirement, under the intended extension for EEA link companies, that a link company and a UK claim or surrender company that is a member of the link company’s group must be connected through a group relationship that does not extend outside the EEA. The hon. Lady gave a helpful example, which I know the Committee always appreciates. The combination of those two changes would significantly extend the range of situations in which claims would be permitted.

The Government considered those issues when they were raised during the consultation, and we do not accept that such changes are required to ensure compliance with EU law. EU law does not extend the freedom of establishment to companies outside the EEA, and the amendments would do that, in going further than EU law requires by gold-plating compliance at the Exchequer’s expense.