Clauses 57 to 60 introduce provisions for disincorporation relief following the Office for Tax Simplification report, published in February 2012 as part of a series of reports into the small business tax. As Committee members know, it is a simple matter for an unincorporated business to change from being a sole trader to a partnership, or vice versa. It is also relatively simple to incorporate an unincorporated business, although tax planning is required to minimise disadvantages. However, the Office of Tax Simplification report highlighted that a small number of incorporated businesses operating as limited companies would prefer to operate in an unincorporated form and that various tax charges and administrative issues could be the factor discouraging them from doing so. The purpose of clauses 57 to 60 collectively is therefore to provide a disincorporation relief and so remove those disincentives. I am sure the Minister will give us some more detail on the clauses.

A number of issues have been raised that it will be helpful to put to the Minister before he makes his remarks so that he can address them. The tax information and impact note indicates that around 610,000 businesses will be eligible for the relief. Has there been an assessment of how many businesses will actually take up the measure?  It seems to be a step about which businesses may require significant advice; what guidance will HMRC—or BIS, for that matter—be issuing for potential users of the scheme?

It has been suggested that the £100,000 asset limit could substantially restrict the number of businesses that will be able to take up the relief; indeed, the Chartered Institute of Taxation has suggested that most businesses owning land and buildings will comfortably exceed the £100,000 threshold and therefore recommends that the threshold be reconsidered or, at the very least, be kept under regular and compulsory review during the five-year period the relief is intended to run for. Will the Minister confirm whether that suggestion has been considered, and whether it will be implemented?

Will the Minister also outline what will happen to those businesses that take steps to disincorporate but then find that HMRC values their assets at more than £100,000—what will be the impact on their tax bill in those circumstances? The impact note suggests that HMRC may require additional resources to administer the relief; will the Minister clarify what assessment has been made of the resource requirements within HMRC? We are very conscious of the staffing reductions at HMRC; has appropriate consideration been given to resources before placing additional burdens on HMRC?

Both the Chartered Institute of Taxation and the Association of Taxation Technicians have expressed concerns that the relief is not to be extended to tax charges that might arise on shareholders as a result of disincorporation. As a consequence, it is thought that the restrictions will very substantially limit the take-up of the relief, and that many small businesses will continue to be operated through limited companies despite the fact that they do not need the commercial protection of limited liability. If that occurs, an opportunity for simplification of the tax system for small businesses will have been missed. Given that many members of the Committee, particularly on the Government Benches, would not like to see that happen, will the Minister explain the rationale behind the Government’s decision in light of the concerns that have been raised?