Clause 10

Part of National Insurance Contributions Bill – in a Public Bill Committee at 9:30 am on 9th December 2010.

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Photo of David Gauke David Gauke The Exchequer Secretary 9:30 am, 9th December 2010

I am grateful to the hon. Gentleman for raising questions about anti-avoidance strategy. It is important, given the reasonably valuable relief available here, that we take measures to prevent avoidance activity.

The hon. Gentleman queries the type of clause and its mention of “main purpose”, which is essentially a test of whether the arrangement is artificial. During his sabbatical from the House, it became increasingly common for clauses along these lines, which ask what the main purpose of the activity was—if it was avoidance, that activity would be ineffective—and the clause is therefore not particularly unusual. It is right that we prevent the situation where a person enters into artificial transactions that are aimed primarily at qualifying for the holiday rather than genuinely carrying on a business. If we did not do so, the cost could be considerable without achieving any of our policy objectives. We hope that we do not have to use it at all, but we recognise that this relief is valuable, and we need to ensure that it is targeted in the normal way. If we need to use it, we are likely to discover that through normal compliance activity.

The hon. Gentleman asked about a right of appeal. There is a right of appeal to an independent tribunal, if the business does not agree with HMRC’s decision. I note that he has been looking at websites for Burger King franchises and so on, and I am sorry if that indicates that the hon. Gentleman is making another career change. Although not everything has gone as well as he might have liked over the past few months, that would be a pity and a great loss to the House. I can assure him, however, that if a genuinely new business is set up under a franchise it would count as a new business for the purposes of the holiday. I hope that my remarks satisfy the hon. Gentleman and that they will dissuade him from setting up a Burger King, whether it is in Nottingham or elsewhere.