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Clause 23 - Loan relationships: debts becoming held by connected company

Part of Finance Bill – in a Public Bill Committee at 5:00 pm on 12th June 2012.

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Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Education) 5:00 pm, 12th June 2012

I absolutely agree with the hon. Gentleman’s second point. The point I am making is that the legislation is backdated to 1 December. If the tax avoidance scheme had come to light on 1 December, why did it take until February to take appropriate action to close it down?

The Government’s use of retrospective tax avoidance action depends very much on each case, and we have discussed at length the circumstances in which tax avoidance is abusive, aggressive and egregious. All those matters need to be discussed at length, so I hope that the legislation on the general anti-avoidance rule that will be dealt with in the coming year will make things clearer. The hon. Member for Amber Valley raised valid points, and companies need to know where they stand with the law. Retrospective action is not ideal, but when circumstances mean that it is necessary, I agree with the hon. Member for Dover that action must be taken.