Finance Bill 2021-22 report stage preview

At report stage MPs will consider further amendments to the Bill, including a number of new proposed government amendments. This will be followed by third reading, a short debate followed by (almost certainly) final approval of the Bill, ahead of its cursory scrutiny by the Lords.

Government amendments

Amendments tabled so far by the government (and therefore likely to pass) are as follows:

Appearing on the order paper 28 January or earlier

Freeports

New clause 1 and new schedule 1 make provision about powers to make regulations in relation to the circumstances in which certain reliefs are available in relation to freeports. It affects first-year allowance for plant and machinery, structures and buildings allowances and stamp duty land tax.

Residential property developer tax

Amendments 1-3 and 8 remove an unnecessary potential circularity in the meaning of an “interest in land” for the purposes of residential property developer tax (RPDT).

Amendments 4 and 5 make another RPDT change. They provide that a licence to use or occupy land that is granted as a result of arrangements under which an estate in the land is to be conveyed, at the request of a company or related company, is not an excluded interest for the purposes of clause 36 (and, accordingly, is an interest in land for the purposes of that clause).

Amendments 6 and 7 provide that a licence of the sort mentioned in subsection (3A) of clause 36 (inserted by amendment 5) would form part of a company’s trading stock for the purposes of that clause.

Economic crime levy

Amendments 9 and 10 ensure that those liable to pay the economic crime (anti-money laundering) levy are referred to as “persons” in each place for consistency with other provisions of Part 3.

Vehicle excise duty

Amendments 11-13 enable the Treasury by regulations to extend the temporary extension of cabotage rights afforded by clause 78 (vehicle excise duty) beyond the current end date of 30 April 2022, but any such extension must end on or before 31 December 2022.

Abolition of basis periods

Amendments 14-17 ensure that a tax liability arising from the transitional arrangements for the coming into force of Schedule 1 (abolition of basis periods) may be reduced at Step 6 of the calculation in section 23 of the Income Tax Act 2007

Qualifying asset holding companies

Amendment 18 corrects a cross-referencing error in schedule 2 (qualifying asset holding companies)

Amendments 19 and 27 clarify what is meant by a person being connected to another, again in relation to schedule 2.

Amendments 20, 21 and 25 provide that the provision of a commercial loan to a fund will not constitute an interest in it for the purposes of determining whether a fund is close and provides for the application of certain rules of schedule 2 in making that determination.

Amendment 22 ensures that managers and general partners of certain types of funds will only be regarded as having control of a fund as a result of their economic interest in it or as a result of their voting power.

Amendment 23 removes an over-elaboration of the concept of voting power (in a fund).

Amendment 24 corrects a cross-referencing error.

Amendment 25 defines “manager” for the purposes of Amendment 22 and paragraph 9(3) of Schedule 2.

Amendment 28 clarifies what is meant by a person having control of another

Amendment 29 removes a provision disapplying provision about intangible fixed assets that is otiose, given intangible fixed assets will not be within the ring fence business of a QAHC.

Amendment 30 corrects an error.

Changes in accounting standards

Amendment 31 clarifies which words are to be omitted from Step 4 in section 76 Finance Act 2012.

Amendment 32 omits a reference in section 77(2) Finance Act 2012 to section 77(3), which is also being omitted.

Amendment 33 ensures that the provisions of section 128 Finance Act 2012 relevant to the transfer of excess basic life assurance and general annuity business expenses in the context of a transfer under Part VII of the Financial Services and Markets Act 2000 are retained.

Appearing on the order paper 31 January

Public interest business protection tax

New clause 3 and new schedule 2 provide for a new tax imposed by reference to the value of an asset that was held by a person for the benefit of a public interest business that enters special measures but was instead used in a way that materially contributed to it entering special measures, or to a significant increase of the costs of that business.

Non-government amendments

Amendments tabled so far by the opposition frontbenches and by backbench MPs (and therefore unlikely to pass) are as follows –

Banking surcharge

Amendment 35 tabled by the Labour frontbench would delete clause 6 which reduces the rate of the banking surcharge and the level of the surcharge allowance.

Economic crime (anti-money laundering) levy

New clause 4 tabled by the Labour frontbench would put into law the Government’s commitment to undertake a review of the Economic crime (anti-money laundering) levy by the end of 2027, and require them to publish an assessment every year until a register of beneficial owners of overseas entities that own UK property is in place an assessment of what impact such a register would have on the effectiveness of the levy, and progress toward the register being established.

New clause 8 tabled by the SNP frontbench would require the Treasury to conduct a review of the Economic crime (anti-money laundering) levy. In particular, the review would need to consider how the introduction of corporate transparency measures previously announced by the Government would affect the levy’s operation.

New clause 11 tabled by the SNP frontbench would require an assessment of the impact of the Economic crime (anti-money laundering) levy on the tax gap and on opportunities for tax avoidance, evasion and other economic crimes.

New clause 27 tabled by Liberal Democrat MP Layla Moran would require the Government to produce an impact assessment of the operation of the new Economic crime (anti-money laundering) levy, and assess how a register of beneficial owners of property would contribute to the effectiveness of the levy.

Annual investment allowance

New clause 5 tabled by the Labour frontbench would require a review of which companies have benefited from the Annual Investment Allowance in 2022-23, broken down by size, sector, and country of ownership, and an assessment of the merits of the super-deduction in light of the AIA.

New clause 9 tabled by the SNP frontbench would require an assessment of the effects of the provisions in clause 12 (annual investment allowance) on GDP in different scenarios.

New clause 10 tabled by the SNP frontbench would require an assessment of the take-up and impact of the temporary increase in the AIA.

Amendment 36 tabled by the SNP frontbench would restrict access to the extended temporary increase in annual investment allowance to businesses that support transition to “net-zero”.

Amendment 37 tabled by the SNP frontbench would restrict access to the extended temporary increase in annual investment allowance to businesses that do not have a history of tax avoidance.

Amendment 38 tabled by the SNP frontbench would amend the transitional provisions for the reversion of the AIA to £200,000 on 1 April 2023, to ensure that smaller businesses with lower levels of qualifying capital expenditure are not disadvantaged by having their effective AIA limit restricted to significantly less than £200,000 for a period.

Tax avoidance

New clause 12 tabled by the SNP frontbench would require an assessment of the impact of the provisions on tax avoidance in clauses 84 to 92 on the tax gap.

New clause 13 tabled by the SNP frontbench would require an assessment of the impact of the provisions of clause 85, and consideration of the impact of publishing a register of overseas property ownership

Residential property developer tax

New clause 16 tabled by the SNP frontbench would require a government assessment of the impact of the Residential Property Developer Tax introduced in this Bill, and of its effect on opportunities for tax evasion and avoidance.

New clause 26 tabled by the Labour frontbench would assess how the revenue the residential property developer tax would raise at a range of rates at 0.5 percentage point increments.

Tonnage tax

New clause 2 tabled by Labour backbencher Grahame Morris and Conservative backbencher Jackie Doyle-Price would require the Government to report to the House on the impact of the provisions of clause 25 (tonnage tax) on the training and employment of UK seafarers

Amendment 34 tabled by Labour backbencher Grahame Morris would require the Government to consult trade unions representing UK seafarers before making regulations pursuant to subsection (8) of clause 25.

Gaming duty

New clause 24 tabled by the SNP frontbench would require the Government to publish an assessment of the provisions of clause 80 (gaming duty) on (a) the volume of gambling, and (b) public health.

Uncertain tax treatment

New clause 20 tabled by the SNP frontbench would require the Government to publish an assessment comparing the rates of uncertain tax in the UK to those of all other OECD countries.

Office of Tax Simplification

New clause 22 tabled by the SNP frontbench would require the Government to publish an assessment of the composition of the Office of Tax Simplification membership with a view to ensuring it is diverse and representative.

New clause 23 tabled by the SNP frontbench would require the Government to publish within 12 months of this Act coming into effect an assessment of the composition of the Office of Tax Simplification membership with a view to ensuring it is diverse and representative.

Impact on tax burden

New clause 6 tabled by the Labour frontbench would require the Government to review what impact measures in this Act are having in 2022/23 on the amount of tax working people will be paying, household finances, and economic growth.

New clause 25 tabled by the SNP frontbench would require the Government to publish an assessment of the impact of the Act as a whole on the tax burden on the hospitality sector.

Impact on tax gap

New clause 14 tabled by the SNP frontbench would require the Government to publish 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.

New clause 19 tabled by the SNP frontbench would require the Government to publish 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.

Impact on climate change

New clause 17 tabled by the SNP frontbench would require the Government to publish an impact assessment of the changes in the Act as a whole on the goal of tackling climate change and the UK‘s plans to reach net zero by 2050.

New clause 18 tabled by the SNP frontbench would require the Government to publish an assessment of the impact of sections 77 to 79 (vehicle taxes) on the goal of tackling climate change and on the UK‘s plans to reach net zero by 2050.

New clause 21 tabled by the SNP frontbench would require the Government to publish an assessment of the impact of sections 99 and Schedule 16 of this Act (emissions certificates for vehicles) on the goal of tackling climate change and the UK‘s plans to reach net zero by 2050.

Impact on equality

New clause 7 tabled by Labour backbenchers Bell Ribeiro-Addy and Apsana Begum would require the Government to review the equality impact of the provisions of this Act, including the impact of those provisions on (a) households at different levels of income, (b) people with protected characteristics, (c) the Government’s compliance with the public sector equality duty, and (d) equality in different parts of the UK and different regions of England.

Impact on GDP

New clause 15 tabled by the SNP frontbench would require a government assessment of the effect on GDP of the international provisions of the Act, and of the Act as a whole, in different scenarios.

The text of these amendments can be viewed in the amendment paper here. Further amendments may appear in future iterations of the amendment paper, available on this link.