Part of Finance Bill – in a Public Bill Committee at 9:30 am on 14 June 2012.
Catherine McKinnell
Shadow Minister (Education)
9:30,
14 June 2012
Clause 36 deals with collective investment schemes. In the 2011 Budget the Chancellor announced his intention to legislate to authorise tax transparent collective investment schemes to be constituted by the contractual arrangements under the UCITS IV directive. According to the impact note:
“The policy objective is to ensure that the UK can compete as a fund domicile for tax transparent funds.”
In other words, the measure is designed to ensure that the UK remains competitive in the asset management market alongside other European jurisdictions such as Luxembourg and Ireland. The move has, not surprisingly, been strongly supported by the Investment Management Association, which represents the asset management industry in the UK. Clause 36 provides powers for the appropriate taxation for capital gains made by UK investors on assets held in such collective investment schemes, and it empowers the Treasury to define in regulations the types of scheme that will be affected.
One concern is that the structure of those schemes will not have been determined at that stage, so the clause will grant a power to define in regulations something that the Government have not yet outlined. I would be grateful for the Minister’s comments on that. The impact note states:
“This measure is expected to have a negligible impact on the Exchequer”,
but if such gains are deemed not to be chargeable under the new legislation, how much revenue will the Treasury forgo by implementing the rules? As I have mentioned, the introduction of the tax transparent fund is designed to attract business to the UK. On whom will the changes have the most impact, and can the Minister provide the Committee with any figures on that matter from the consultations that have been carried out? Has the Treasury considered the potential for abuse of the rules, and can the Minister reassure the Committee about that? What anti-avoidance measures will the rules include?
I understand that clause 215 will be considered in conjunction with clause 36. Clause 215 fulfils a consequent requirement to allow the Treasury to provide, through regulations, an exemption or relief from stamp duty or stamp duty reserve tax for transactions related to collective investment schemes. I have no queries about that.
A parliamentary bill is divided into sections called clauses.
Printed in the margin next to each clause is a brief explanatory `side-note' giving details of what the effect of the clause will be.
During the committee stage of a bill, MPs examine these clauses in detail and may introduce new clauses of their own or table amendments to the existing clauses.
When a bill becomes an Act of Parliament, clauses become known as sections.
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