Application of penalty provisions

Part of Finance (No. 3) Bill – in a Public Bill Committee at 3:45 pm on 6 December 2018.

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Photo of Robert Jenrick Robert Jenrick The Exchequer Secretary 3:45, 6 December 2018

I will respond to as many of those questions as I can; if I omit any answers, I will write to the hon. Gentleman.

With respect to the Isle of Man’s SDIL in clause 67, I am sorry to disappoint the hon. Gentleman, but no one currently produces soft drinks on the Isle of Man—so there is a business opportunity, should any of us need one in the near future. The Manx soft drinks industry levy is expected to be identical to the existing one in the rest of the United Kingdom. We do not expect that there will be any issues on enforcement, although we will of course continue to monitor that closely.

On the number of registered businesses, 450 have already registered. The top four of those by volume pay 90% of receipts, as one would perhaps expect.

In terms of publicising the changes to businesses, we have not specifically publicised those—we have taken a light touch in the first year of operation—but we do not anticipate any difficulties, given that there is only a small number of registered businesses.

The hon. Gentleman had a particular interest in the duty periods. The duty period runs from April to June, and that is due on 1 August. The July to September duty period is due on 1 November.

In terms of why we are taking this action now, we always intended to be as light touch as possible, but it is sensible to proceed with this housekeeping on behalf of HMRC to ensure the full range of compliance and penalty powers are available to combat non-compliance. We do not have evidence to date of any material degree of fraud or non-compliance, and certainly nothing that should make the hon. Gentleman or any other hon. Member concerned, but it is sensible and prudent for us to take this action, should circumstances change in the future.

The hon. Gentleman asked about some specific details, including how much the penalty will be for late returns. It will be £100 in the first instance, rising to £400 for four or more offences. The first late return will incur that fixed amount of £100. The penalty will then rise to £200 for a second late return within a 12-month period, to £300 thereafter, and eventually to £400. We think that is proportionate given that there has not been a significant problem to date, and that gives HMRC the powers it requires.

Where a return for a particular period is still not filed within 12 months, a further penalty will be issued, in the amount of 5%, 70% or 100% of the liability for the return period, depending on whether HMRC believes there has been a deliberate and concealed effort to withhold information, or £300—whichever is greater. Those are not excessive sums, but they give HMRC the powers it requires.

The hon. Gentleman asked about the important issue of schools funding. The objective of the policy was never to raise revenue for the Exchequer; it was always to ensure that manufacturers did the right thing and reformulated where appropriate and where they felt they were able to. As I said, the majority of them have done so. Some took significant risks. Manufacturers with loyal customer bases—Irn-Bru and Lucozade, for example—had to make major reformulations, which were not always popular with their customers but none the less significantly reduced the sugar in their products. We are grateful to them for taking the policy so seriously.

The amounts we promised to fund school sports are being honoured. The Department for Education will receive £575 million during the current spending review period. That funding has been allocated to a number of programmes to support pupil health and wellbeing, and includes doubling the funding for the primary physical education sport premium to £320 million a year from 2017. The Department for Education and the Department of Health and Social Care contribute £100 million and £60 million to that premium respectively, with the soft drinks industry levy contributing £415 million over the remainder of the current spending review period. We have provided £100 million in 2018-19 for the healthy pupils capital fund, and £26 million to kick-start or improve breakfast club provision in more than 1,700 schools. Although the Treasury forecasts in this case were not correct, there has been a happy ending.