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(Except clauses 1, 5 to 7, 11, 72 to 74 and 112, schedule 1, and certain new clauses and schedules) - Clause 61 - Business premises renovation allowances

Finance (No. 2) Bill – in a Public Bill Committee on 13th May 2014.

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Amendment proposed (this day): 21, in clause 61, page 52, line 41, at end insert—

(a) the Chancellor of the Exchequer shall, within six months of this Act receiving Royal Assent, undertake a review of the impact of changes made by this section on—

(i) the uptake of the business premises renovation allowances (BPRA);

(ii) the number of BPRA schemes disclosed through DOTAS being investigated by HMRC; and

(iii) the value of BPRA schemes disclosed through DOTAS being investigated by HMRC.

(b) the Chancellor of the Exchequer must publish the report of the review and lay the report before the House.’.—(Shabana Mahmood.)

Question again proposed, That the amendment be made.

Photo of Martin Caton Martin Caton Labour, Gower

I remind the Committee that with this we are discussing clause 61 stand part.

At 11.25 am, the Minister had not quite finished, so I call him to conclude his remarks.

Photo of David Gauke David Gauke The Exchequer Secretary

It is a great pleasure to welcome you back to the Chair this afternoon, Mr Caton. As you say, I had not quite managed to complete my remarks on clause 61 regarding business premises renovation allowances.

When we were interrupted, I was responding to the question from the hon. Member for Birmingham, Ladywood (Shabana Mahmood) about whether the definition used in proposed new subsection (2C) to section 360B of the Capital Allowances Act 2001 is exact enough. I was making the point that BPRA aim to offer relief on the cost of project management services provided to co-ordinate building works. In some BPRA schemes, the project management role can be much wider and can include attracting tenants or marketing the property to investors, which are not allowable expenditure. To focus the relief on managing the building works, allowable costs have been limited to 5% of the total cost of those works, which is considered to be in line with commercial rates for such activities. The legislation does not prevent more than 5% from being charged, but  only a sum that relates to direct building works can be relieved. Her Majesty’s Revenue and Customs will also examine claims to check whether they are realistic.

The hon. Lady also made a point about how many disclosures of tax avoidance schemes there have been in relation to BPRA. In 2011-12 there were 19; the same number in 2012-13 and 13 in 2013-14. During the period 2007 to 2011 there were 11 such disclosures. I have combined those years to ensure that individual schemes cannot be identified.

I shall quickly address amendment 21. It asks that the Chancellor, within six months of the Act receiving Royal Assent, undertakes a review of the impact of changes made by the clause. While the Government keep all tax policy under review, there is limited merit in conducting an evaluation in the way the amendment suggests. There are also a number of obstacles that mean it would not be possible. HMRC will not have the relevant data to conduct such an evaluation for another year. It is also worth pointing out that BPRA is due to end in April 2017 and a review of its effectiveness, based on the available data, will be carried out in the preceding year in line with the normal tax policy making practice. I think the hon. Lady said it was a probing amendment. I hope on that basis that I can persuade her not to press it to a vote.

Finally, clause 61 ensures that BPRA continues to benefit the most disadvantaged areas in the UK while preventing abuse by confirming its original intentions. That is the balance that we have to strike in terms of BPRA, the point made by the hon. Lady earlier. I believe we are striking that balance. I ask that the amendment be withdrawn and hope that that clause can start part of the Bill.

Photo of Shabana Mahmood Shabana Mahmood Shadow Minister (Treasury)

It is a pleasure to welcome you back to the chair, Mr Caton. I am grateful to the Minister for his comments on the clause, particularly his explanation of the definitions used in new subsection (2C). We need to keep a watching brief on this area to ensure that it is not open to the abuse we have seen in the past, which we hope the clause will remedy. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 61 ordered to stand part of the Bill.