New Clause 1 - Review of reliefs on investments

Finance (No. 2) Bill – in a Public Bill Committee at 10:30 am on 11 January 2022.

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“The Government must publish within 12 months of this Act coming into force an assessment of the impact on the tax gap of the reliefs on investments contained in this Act, and of whether those reliefs have increased opportunities for tax evasion and avoidance.”—

Brought up, and read the First time.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

With this it will be convenient to discuss new clause 6—Review of impact of reliefs in Act on the tax gap—

“The Government must publish within 12 months of the Act coming into effect an assessment of the impact of the tax reliefs in this Act on the tax gap, and of whether they have increased opportunities for tax evasion and avoidance

Photo of Richard Thomson Richard Thomson Shadow SNP Deputy Spokesperson (Treasury - Financial Secretary), Shadow SNP Spokesperson (Wales), Shadow SNP Spokesperson (Northern Ireland)

I echo everything that everyone has said so far about the smooth running of the Committee. I congratulate and give grateful thanks to the Clerks and everyone who has supported each of us in what we have tried to achieve here.

I will try to be as brief as possible. New clause 1 is self-explanatory. If we had a simple tax code, we probably would not need an Office of Tax Simplification or have a tax gap as large as £35 billion. The new clause simply asks the Government to assess this, because they cannot possibly hope to address problems that they do not know about or understand.

At the risk of sounding like a broken record, my comments about new clause 1 are relevant to new clause 6 as well. With that, I draw my remarks about the new clauses to a close.

Photo of Lucy Frazer Lucy Frazer The Financial Secretary to the Treasury

I would like to address the points made by the hon. Member for Glasgow Central about the process, which she made earlier in the Committee’s proceedings too. There is a clear process for how we make legislation and taxation. There is a large amount of consultation. The process is that we announce a consultation, there is a consultation, we reflect on the consultation, and then we bring in legislation. So long as I am in this position, I am happy to hear points made by the Opposition in the course of that consultation process, to ensure that we have the right and appropriate legislation on our statute book.

New clauses 1 and 6 would require the Government to publish an assessment of the impact of the tax reliefs in the Bill, including the reliefs on investments, on the tax gap, and to look at whether they have increased opportunities for tax evasion and avoidance. There are a number of new measures already in the Bill to ensure that we reduce the tax gap as far as possible. There are also measures in the Bill that deal with tax avoidance more broadly.

We have had significant success in bringing down the tax gap since 2010, as a result of the measures we have taken. I reassure the hon. Member for Gordon that we produce estimates of error and fraud, where we deem those appropriate. For example, estimates on corporation tax research and development reliefs were included in the annual reports and accounts, and we will continue to do that.

For those reasons, I believe that a separate reliefs impact assessment is not appropriate, and I ask the Committee to reject the new clauses.

Photo of Richard Thomson Richard Thomson Shadow SNP Deputy Spokesperson (Treasury - Financial Secretary), Shadow SNP Spokesperson (Wales), Shadow SNP Spokesperson (Northern Ireland)

I think I have said all that needs to be said on this subject; I am happy to let my remarks stand. I beg to ask leave to withdraw the clause.

Clause, by leave, withdrawn.