Finance Bill 2020 report stage day 1

MPs considered amendments and new clauses tabled to the Finance Bill, relating to the Digital Services Tax, the Bill's environmental impact, the loan charge and off-payroll working. 

Timetable

The timetable for the day was as follows -

Finance Bill Ways and Means Resolutions debate (up to 45 mins) - taken formally with no debate at c2.45pm 

Finance Bill Programme Motion debate (up to 45 mins) - - taken formally with no debate at c2.45pm

Group 1: Digital Services Tax (Amendments and new clauses related to) - started c2.45pm

Group 2: Environment and Human Wellbeing (Amendments and new clauses related to) - started c5pm 

Group 3: Job Creation and Employment Taxes (Amendments and new clauses related to), including the loan charge and off-payroll working changes - started c7pm

There was a maximum of six hours allowed for debate on the programme motion and the three groups of amendments and new clauses. This was followed by votes on amendments and new clauses in group 3.

Tomorrow MPs will debate amendments and new clauses related to tax reliefs and coronavirus support measures (taxation of, compliance with) and easements. 

Background

Documents on the Bill can be read here. These include explanatory notes on the clauses and the text of amendments and new clauses tabled for debate.

Proceedings can be watched here.

You can read our liveblogs on earlier Finance Bill debates:
Second Reading debate - Monday 27 April 2020
Public Bill Committee - 1st sitting (4 June, am); 2nd sitting (4 June, pm); 3rd sitting (9 June, am); 4th sitting (9 June, pm); 5th sitting (11 June, am); 6th sitting (11 June, pm); 7th sitting (16 June, am); 8th sitting (16 June, pm); 9th sitting (18 June, am); 10th sitting (18 June, pm)

The live blog below is contemporaneous and not checked against Hansard. We cannot guarantee that no errors have crept in and we advise on checking any passage against Hansard before repeating it.

Ways and Means Resolution (Coronavirus)

All tax measures and other charges (new taxes/charges and increases to existing ones) require a ‘ways and means resolution’ to authorise them before they can be legislated for. All of the measures in the Finance Bill as it stands have been authorised through such resolutions already. The resolutions tabled here authorise the government amendments and new clauses - all relating to schemes and easements in response to coronavirus - which will be voted on over the next two days. You can read the resolution pn page 4 of today's order paper here. Up to 45 minutes was allowed for debate on this resolution.

Liveblog

The Financial Secretary, Jesse Norman, moved this formally, and no speeches were made. It was approved without a vote.

Programme Motion

Programme motions are used by the government to timetable debate on proceedings in Parliament. This motion sets a timetable that can be summarised as:

Day One (Wed 1 July)
Amendments relating to the Digital Services Tax (to conclude no later than two hours after debate on the programme motion started)
Amendments relating to the impact of the Bill on the environment, human wellbeing and related matters (to conclude no later than four hours after debate on the programme motion started)
Amendments relating to the impact of the Bill on job creation and employment, and to the Bill's employment tax provisions (including the loan charge and off-payroll working) (to conclude no later than six hours after debate on the programme motion started)

Day Two (Thur 2 July)
Amendments relating to tax reliefs contained in the Bill
Amendments relating to the response to coronavirus, and the impact of the Bill on poverty; plus anything not already covered 

In the above, 'amendments' also encompasses new clauses and new schedules.

Liveblog

The Financial Secretary, Jesse Norman, moved this formally, and no speeches were made. It was approved without a vote.

Group 1: Digital Services Tax

Amendments and new clauses in this group

Amendment 18 (Labour) would require the Government to report on the DST annually - DEFEATED

Amendment 19 (Labour) would require any report on the DST to include an assessment of the effect of the DST on tax revenues - NOT MOVED

New clause 5 (SNP) would require a Government assessment of the effect on tax revenues of the DST, and in particular the change in revenues associated with Scottish Limited Partnerships- NOT MOVED

New clause 33 (cross-party) would require all groups subject to the DST to publish a group tax strategy, including a country-by-country report. Such a report would include information about the group’s global activities, profits and taxes. This new clause is proposed by a group of MPs, led by Dame Margaret Hodge (Labour) and Andrew Mitchell (Conservative) associated with the All Party Parliamentary Group on Anti-Corruption and Responsible Tax. (NB. An amended version of this has been published - earlier version omitted a concluding subsection.) - NOT MOVED

Liveblog

Debate on this group was opened by Shadow Chief Secretary to the Treasury Bridget Phillipson. She welcomed the DST but said her party's support was qualified. She was disappointed it has not been possible to reach international agreement on this area. She said COVID-19 had provided an unexpected boom for tech giants while the high street had been badly hit. She said more was needed from government to clamp down on tax avoidance. 

Lib Dem acting leader Sir Edward Davey, in an intervention, described the DST as a 'mouse' of a measure and called for the Uk to co-operate with the EU to develop something stronger. Phillipson agreed with that sentiment.

Phillipson said that CIOT had highlighted the limitations of this measure, noting that it is not aimed at stopping profits arising in the UK being shifted by mutimationals out of the UK to tax havens. 

On new clause 33, Phillipson praised Margaret Hodge for her work on this area and expressed disappointment that she would not be able to contribute to the debate because virtual contributions are not allowed. She said the new clause would be of practical use and would also help to address the concerns she had outlined. It would pave the way for company country-by-country reporting at a wider level.

The second speaker was Conservative MP and former International Development Secretary Andrew Mitchell, who set out the case for new clause 33. He noted that three former and current chairs of the Public Accounts Committee were supporting the new clause. He said it was obscene and offensive that some major corporations which made huge profits in the UK are not paying their fair share of tax. He said the new clause was part of the 'noble campaign to shine a light on the profit shifting, transfer pricing and tax haven abuse that is used to minimise tax liabilities'.

SNP spokesperson Alison Thewliss expressed the SNP's support for the DST and said her party's new clause would force the government to make an early assessment of the tax's success. Like Phillispon she highlighted te strugges of high street stores, with new job losses announced today, and said it was 'not a level playing field' with online retailers. She said it was regretable the UK was implementing the tax unilaterally rather than jointly with European partners. She asked the Financial Secretary (FST) to update the House on progress on international co-operation in this area. She also offered SNP support for NC33. 

Chris Evans (Lab) spoke in favour of amendment 18, focusing his remarks on the pressures high street businesses are facing. These businesses, many of them family owned, had stepped up to the plate during the coronavirus crisis, he said, and all they ask for is a level playing field. He posted a question: why is it that large multi-national companies such as Amazon who undercut our local shops are allowed to pay lower tax rates than shops in the high street? He accused them of exploiting gaps in national tax laws to reduce their tax bills.

Andrew Jones (Con) said the march of online retail had been a feature of the lockdown but the growth of the digital economy was deeper. The digital economy is the future - this presents challenges to HMT, in terms of tax collection. The evolving nature of the economy means tax needs to evolve too. He said he was not normally keen to find new ways to tax people but we need to fund public services. It was unusual that this was a tax on revenues but he regarded this as a positive thing because we are dealing with very large companies.

Steve Brine (Con) intervened to say this left business rates looking more and more dated. Jones agreed, saying it was an analogue tax in a digital world, and it would need to evolve and then be replaced.

Rupa Huq (Lab), an officer of the APPG on Anti-Corruption, focused on NC33. She said we know there are Amazon warehouses in the UK but its UK subsidiaries paid just £5m of tax in the UK last year 'when they make billions and billions'. She accused the government of timidity. This amendment would provide for a level playing field. David Cameron had said 'let sunlight be the best disinfectant'. 

Miriam Cates (Con) said she had learned a lot (and enjoyed) sitting on the Finance Bill committee. She welcomed the introduction of the DST. "Economies evolve, and it is right that from time to time we act to address imbalances and unfairnesses that have arisen as a result of this evolution." She said she had no interest in condemning the success of internet companies - "the reason they have been successful is they have harnesses technology to provide something that consumers want." But the tax system had not kept up and digital companies now face unfair advantages - this new tax seeks to address that unfairness. 

Kevin Hollinrake (Con) noted that the DST was temporary and therefore something else will be needed to replace it. He said NC33 was a radical reshaping of how tax affairs would be disclosed and it is essential if we are going to tackle this fundamental problem that we do have c-by-c reporting. He had met with a senior executive at Kelloggs who had spoken about the company's CSR policies. He had asked him: How can you square the circle of saying you have good CSR policies, putting money into social projects in the UK, when you don't pay UK corporation tax. He described this as a cynical approach. The answer the executive gave was the duty to shareholders to minimise tax. 

Hollinrake then turned to the case study of Google. Google in 2018 turned over £137bn. Net profit of £31bn. In Uk in same year turned over c£10bn. So if you divide one by the other they made £2.2bn of profit in UK activity. Apply 19% corporation tax to that you get £420m in CT they should have paid. They actually paid £67m. Another Conservative MP intervened: "It confuses me, I would have thought very clever tax inspectors could visit these international companies. Surely they can't disguise the money they are sending out of the country? Surely we have got methods of checking that, and from that we can devise a way of actually taxing them on those things, because it seems to me, from what I'm gathering, listening to this debate, that these companies seem to be able to spirit it away with magic dust or something, and I'm sure they can't." Hollinrake replied HMRC have good people but these companies have good advisers too, and that's why the government has stepped in, but it's certainly not easy.

Alison McGovern (Lab) also spoke in support of NC33. She praised the cross-party approach on the amendment including in particular Andrew Mitchell and David Davis's contributions. Her experience on the Treasury Committee had shown her the complexity of reforming business rates. She could see why it had been put in the 'too difficult' box, but we shouldn't shy away from things that were 'too difficult'. If we want a more equal world we should turn our minds not just to aid but to 'changing the rules of the game'. 

Jim Shannon (DUP) spoke to NC5. He said he had been pushing shops in his constituency to develop their online presence where possible. He said multinational companies should be made accountable and the money they earn in this country should stay here.

Financial Secretary, Jesse Norman, wound up the debate for the government. He said the DST was not an anti-avoidance measure - 'it is in fact a new tax aimed at a new revenue base'. It breaks new ground in what a tax is, by taxing UK user contributions. It is a pioneering tax, he added. On international co-operation he said that while we welcome recent progress towards global solutions there are still important issues needing to be resolved.  

On amendments 18 (annual review of DST) and 19 (effect on tax revenues) he said clause 70 of the Finance Bill already requires the government to review the DST in 2025 - this would be a broader review than the review being called for by the opposition. HMRC already regularly report on the tax they are responsible for collecting and the revenue they generate. The government would keep the tax under review under normal Budget processes. Amendment 5 (which relates especially to Scottish Limited Partnerships) would require a report which would not provide useful information beacuse DST payments will not be required until after the end of the relevant accounting epriod for each group - it will also be a tax on groups, not individuals.

On NC33 he said the DST was not an anti-avoidance measure, it is a temporary response to concerns that the international corporate tax system has not responded adequately to digitalisation. He said government required large businesses to publish an annual tax strategy already. The effect of this is many large businesses subject to DST will already be complying with requirement to produce a tax strategy. Currently we do not require large businesses to publish c-by-c reports but they can publish on a voluntary basis and some have chosen to do so, including Shell and Vodafone. He said he was actively exploring ways to encourage other businesses to follow suit but the government took the view that for the timebeing the approach should be voluntary until c-by-c reporting could be agreed on a multilateral basis. A unilateral approach would result in incomplete and possibly misleading information being published. It could also allow requirements to be avoided through group restructuring by groups moving their headquarters out of the UK.

He said the government 'are publishing a business rates review which will specifically include online forms of taxation and invite public discussion on those.'

He said as a matter of legal fact in the UK companies are run not in the exclusive interests of their shareholders - 'the shareholders are entitled to the residual proceeds but companies are run... in the interests of their members'.

Bridget Phillipson then moved amendment 18. A division was called. The amendment was voted down by 340 votes to 248.
 

Group 2: Environment and Human Wellbeing

Amendments and new clauses in this group

New clause 28 (Labour) would require the Chancellor of the Exchequer to review the impact of the Bill on the environment - DEFEATED

New clause 13 (SNP) would require the Chancellor of the Exchequer to review the impact of the Bill on the UK meeting the UN Sustainable Development Goals - NOT MOVED

New clause 14 (SNP) would require the Chancellor of the Exchequer to review the impact of the Bill on the UK meeting its Paris climate change commitments - NOT MOVED

New clause 34 (cross-party, led by Green MP Caroline Lucas) would require the Chancellor of the Exchequer to review the impact of the Bill on human and ecological wellbeing, including the wellbeing of future generation  - NOT MOVED

Liveblog

Wes Streeting (Labour), Shadow Exchequer Secretary, moved New clause 28. He contrasts the fast and great change in response to COVID-19, with the lack of action on the ‘climate change emergency’. The planet is burning, he said, causing public health crises among other things. Sea levels predicted to rise which will impact on the UK. Urgent steps must be taken now. Poorest communities are suffering from man made climate change. This Finance Bill is an example of the Government fiddling while the planet burns. The Government’s measures do not do enough collectively, despite welcomed individual measures. Green party leader Caroline Lucas intervened to say the £27 million planned expenditure on road expenditure is a mistake.

He cites the Committee on Climate Change to say the Government is not making adequate progress in tackling climate change. He used the example of two million homes built since Climate Change Act was passed are likely to need expensive ‘zero-carbon retro fits’. He complained about the lack of coherent policy on the agriculture sector.

We should not rely on fiddling the figures or an economic crisis to achieve our carbon budgets.

The UK is one of the most nature depleted countries in the developed world, he claimed.

Less than a third of the public think the Government has a plan to achieve net zero, according to a recent poll.

Climate justice and social justice goes hand in hand.  We need to accelerate progress to net zero. Climate change should be at the heart of the next Budget – leadership from the Treasury is crucial.

Let’s build back better, let’s build back greener, he charged.

Andrea Leadsom, Conservative, said a focus on ‘green growth’ is essential. She talked up the Government’s record on climate change compared to other developed countries. We can do better than two million ‘green colour jobs’, she insists, adding the UK is creating an ideal platform for new jobs.

A Labour MP intervened to complain that the Government has no target for low carbon heating. Leadsom said renewables account for 37 per cent of electricity to the network in the UK this year.

She urged the Chancellor to have two key priorities: green jobs; and clear deadlines that create investible opportunities. Decarbonising in the UK is a small part of the picture. Cop 26 must be a turning point for the world. She wants to see a new ‘year book’ at COP26, where each country has to update their work. She also urged the Government to champion an international infrastructure organization to fund global decarbonisation. She wants to see an internationally-recognized carbon offsetting  licensing body.

Stephen Flynn (SNP) spoke about New clause 13 which ‘addresses an incredibly important issue’. It would require the Chancellor to review the impact of the Bill on the UK meeting the UN Sustainable Development Goals. These goals should be at the heart of all legislation, as it is in Scotland, he claimed.

On New clause 14, Flynn said the climate emergency has not gone away because of the emergence of COVID-19. COVID-19 has shown how fragile is world society. We will not get to net zero without taking oil and gas industry with us.  The UK Government has failed to get a new deal for oil and gas, to achieve a sustainable future; the Scottish Government has put £62 million into sustainable energy going forward, such as £25 million into a sustainable energy zone – but the UK Government has done next to nothing in comparison. £350 billion is coined from oil and gas sector and it is time to give back in spades.

Andrew Jones (Conservative) said a financial lever to change behavior for companies using plastic packaging is a good thing. Sobel called for further progress on increasing the uptake of electric vehicles.

Alex Sobel (Labour) said the UK is still addicted to petrol and diesel and therefore questions the ambition of the Finance Bill. He said we need to look to Norway with its sales tax and charging points, and other measures which means electric vehicles are popular in that country. The UK is a global leader in the reduction in the use of coal fire stations but in every other area, the UK is not a global leader. The Treasury must bring forward incentives; not enough to talk a good game, he adds.

Sobel chairs the APPG on net zero. He said there is a lack of confidence in the energy sector in the UK. We must think more broadly about measures. We need to re-tool our workforce, after all. We should repurpose factories that make caravans to build a modular passive zero carbon standard homes.

Sobel suggests VAT rules on new build v refurbishing homes is ‘perverse’ when it comes to the environment.

He said there should be a ‘green fiscal rule or measure’ that looks at every policy.

Mike Amesbury (Labour) also talked about the opportunity to build environmentally friendly modular homes. On renewable energy, he said hydrogen is a growth industry and he would like the Government to escalate that.

Anna McMorrin (Labour) complained about the apparent abandonment of a tidal lagoon project in South Wales and electrification of certain rail lines in that nation. The Government has failed to build climate resilience into its work. More money is spent on roads than ‘greening our rail networks’. We must stop financing failure and financing the future, she said in her impassioned speech. A recent poll said six in ten want the Government to put health and well being ahead of growth after this pandemic.

Claudia Webbe (Labour) set out how Europe is having its hottest years at the moment. She said the Government’s commitment to bring greenhouse gas emissions to net zero by 2050 ‘perilously unambitious’ but they are not even on track to meet it. She complained about the Government giving tax breaks to the oil industry. She calls for full fibre broadband free at the point of use, a mass house insulation programme and integrated public transport system.

The UK must take strong action against tax evasion and international fossil fuel finance and ramp up support for a just global energy transition. The Government must increase its ambition, she charged.

The UK must take strong action against tax evasion and international fossil fuel finance and ramp up support for a just global energy transition. The Government must increase its ambition, she charged.

Catherine West (Labour) said housing was too far down the Prime Minister’s speech about the economy bouncing back from COVID-19 this week. There is plenty of ‘low hanging fruit’ that the Government can tackle to improve its environmental record. Green measures must be targeted at people on low incomes, saying electric cars are too expensive.

She wonders what the replacement is for the European Trading Scheme on emissions.

Caroline Lucas (Green party leader) said this is a pivotal moment that could lock us into high carbon dependency or start to lay foundations of a green, safer, fairer future. Prof Dasgupta says economies are embedded within and not external to nature – so we urgently need a new economic rulebook. Just six per cent of the public want a return to the pre-pandemic economy, she claims. The Treasury could do worse than start with the seven wellbeing goals in the Wales Future Generations Act, she suggests. A care-led recovery is also a green-led recovery. Unless we get the ambition right on net zero, we will not get very far. We should get to net zero by 2030 – not 2050! Not a penny more in bailouts for companies that do not have a programme in place to support workers and, crucially, transition to a sustainable route forward. Not a penny more for fossil fuel exploitation, she pleaded.

Zara Sultana (Labour) called for an end to bailouts to companies in ‘tax havens’.

Tim Farron (Lib Dem) said billions should be spent on a green recovery that averts a recession – and will take more than the 0.2 per cent promised by the Government in the PM’s speech this week. We need to make zero carbon homes more affordable by looking at the Land Compensation Act of 1961. He read out a list of measures he said will help rural economies, especially on public transport. He also talked up tidal power, saying the UK has a natural advantage on this like Canada.

Tax Minister Jesse Norman talked up the Government’s achievements on offshore wind and reducing emissions. Tackling climate changes is a priority for the Government, he insists.

On New clause 28, Norman said the Government is committed to achieving ‘net zero’. On New clause 13, Norman said it is already a requirement of UN member states to review their progress to meeting these global goals at least once. On New clause 14, he said the current rules are among the most stringent in the world. On New clause 34, the Environment Bill will ensure environment is at the heart of policy making.

Norman went on to say the Government has framed two replacement for European Trading Scheme (ETS): a UK ETS; and the second is carbon emissions tax.

He said the South Wales tidal lagoon was found to be a ‘bad’ project and not value for money.

Wes Streeting concluded the debate on this grouping of amendments.

There was a vote on new clause 28. It was defeated 342-246.
 

Group 3: Job Creation and Employment Taxes, including the loan charge and off-payroll working changes 

Amendments and new clauses in this group

Loan charge

New clause 1 (SNP) would require a review of the impact of the scheme to be established under Clauses 20 and 21 (loan charge) - DEFEATED

New clause 31 (cross-party, lead signatories David Davis (Con) and Sir Edward Davey (Lib Dem)) provides that, in respect of loans made in 2015/16 tax year and any earlier tax years, the loan charge applies only if the taxpayer submitted their tax return and deliberately did not declare the loan to be income. The clause also extends this protection to taxpayers who were not required by HMRC to submit tax returns. NOT MOVED

Amendment 55 (also cross-party, lead signatories David Davis (Con) and Sir Edward Davey (Lib Dem)) is consequential on new clause 31. It provides that a prior settlement with HMRC can be unwound unless the worker failed to account for a 2015/16 tax year (or earlier) liability in his or her tax return deliberately despite knowing that the loan should have been included as income. NOT MOVED

Off-payroll working (IR35)

New clause 35 (Lib Dem) would provide that the IR35 provisions of the bill would not take effect unless the Treasury has conducted and published a review of off-payroll working legislation. NOT MOVED

Amendments 16 and 17 (both SNP) would remove clause 7 and schedule 1 from the Bill respectively. Following committee stage amendments clause 7 and schedule 1 make provision about workers’ services provided through intermediaries (also known as off-payroll working or IR35). NOT MOVED

Amendments 20-36 and 57 (cross-party, lead signatories David Davis (Con) and Sir Edward Davey (Lib Dem)) seek to delay the introduction of the IR35 changes until the tax year 2023-24. AMENDMENT 20 DEFEATED

Amendments 37-54 and 56 (cross-party, lead signatories David Davis (Con) and Sir Edward Davey (Lib Dem)) seek to attach conditions relating to the rights of workers to the introduction of the IR35 changes. NOT MOVED

Other

New clause 26 (Labour) would require the Chancellor of the Exchequer to review the impact of the Bill on job creation - DEFEATED

New clause 12 (SNP) would require a review of the impact of the Bill in different possible scenarios with respect to the continuation of the coronavirus support schemes. NOT MOVED

New clause 18 (SNP) requires a review of the impact on investment, employment and productivity of the changes made by the Act over time; in the event of a free trade agreement with the USA; and in the event of leaving the EU without a trade agreement, with an agreement to retain single market and customs union membership, or with a trade agreement that does not include single market and customs union membership. NOT MOVED

Liveblog

Opening the debate for the opposition, Pat McFadden (Labour) said that IR35 required an approach bringing together tax and employment law issues, that levelled up protections for the self-employed and tackled ‘bogus’ self-employment.

He noted that the chancellor had already hinted at future changes to the treatment of self-employment workers because of the support provided during the Coronavirus pandemic. He said that he would be asking the government to provide a timetable for its changes to IR35 and on its attitude towards those calling for a delay in its roll-out to the private sector.

On the loan charge, he said that his party had supported attempts to tackle avoidance and expressed concerns at the plight of those unwittingly advised to undertake such arrangements. He said that the opposition would continue to press government and HMRC to tackle the promoters of such schemes and ensure accountability.

Sir Edward Davey (Lib Dem) asked if Mr McFadden would support his efforts for a vote to be called on New Clause 31, which deals with the loan charge. McFadden said that this would be a decision for the Speaker.

McFadden said that the opposition’s New Clause 26 focused on the issue of jobs because this represented the ‘principal economic challenge’ facing the United Kingdom at present.

He spoke about recent announcements in relation to job losses across the economy, his own experiences of unemployment in the 1980s and the need for the government to continue to provide employment and income support schemes in light of the potential for regionalised lockdowns.

He said that this required the government to take another look at the flexibilities within these schemes.

On the government’s economic recovery plan, McFadden suggested that the Prime Minister’s comparisons with FDR were ill advised and pondered if such comparisons showed that the Prime Minister was ‘uncomfortable with just being himself’.

He said that while the United States had invested 40 per cent of its pre-depression GDP in its economic recovery, the proposals set out this week amounted to 1 per cent of the UK’s GDP. Comparisons with FDR would be returned to in later contributions from Labour and SNP MPs.

He concluded by saying that that moments such as the Coronavirus pandemic and the need for and economic response 'showed why governments exist'.

David Davis (Conservative) quoted former US Supreme Court Justice John Marshall, who said that the ‘power to tax is the power to destroy’. He said that the loan charge had cost lives, was unfair and retrospective.

He said that ‘many ordinary decent people, not big city bankers’ had been misled by employers, robbed of their peace of mind and self-respect and, in some cases, had lost their lives.

He said that his proposed new clause on the loan charge would prevent the government from pursuing any employees who were innocent parties and who had believed they had been acting correctly and in good faith.

Davis then spoke to amendments in his name that would lead to the deferral of the implementation of IR35 to the private sector to 2023/24. He said that implementing IR35 before then, as the economy recovers from Coronavirus ‘would cost jobs and cause serious economic damage’. He then quoted extensively from the recent House of Lords Economic Affairs committee report into the policy and accused the government, deliberately or otherwise, of creating a class of ‘zero rights employees’.

Alison Thewliss (SNP) said that the implementation of the loan charge had been a ‘disgrace’. She criticised the 'cosy relationship' between the government and the review group established to consider the Loan Charge and said it was a 'scandal' that tax professionals had advised clients to use such loopholes, which ultimately deprived the Treasury of much needed revenue.

She said it was disappointing that there would be no vote on the Loan Charge this evening, given the breadth of support from across the House of Commons for the measure.

Ms Thewliss said that the SNP's Amendment 16 would scrap IR35. She called on the government and take advice of the Lords, pause the policy and 'go back to the drawing board'.

She then spoke to the concerns of many of her constituents who have been impacted by the policy. She also said that the introduction of the CEST tool, which she described as 'problematic' had meant that the government had 'tried to replace a complex legial specialty in employment law and replace it with an online quiz'. Thewliss said that the government needed to rethink its approach to its Coronavirus economic support schemes in light of recent redundancy announcements and to support the nations and regions of the UK. Like Pat McFadden, Alison Thewliss spoke to the experiences of Glasgow in the 1980s and said she was determined to ensure that there was no repeat of these challenges in the 2020s.

On off-payroll working, Andrew Jones (Conservative) said that while there were 'unscrupulous' employees 'bullying' staff to work as contractors. This deprived workers of employment rights and the government of revenue. But he also said that there were many workers who chose to be freelancers. This added both flexibility and dynamism to the economy.

Paula Barker (Labour) said that the government had the power to extend support to workers impacted by the Coronavirus lockdown and warned of the dangers of a 'tidal wave of employment'. She said that the government needed to 'scale up' its economic response.

Stephen Hammond (Conservative) focused his remarks on the loan charge. He welcomed the Morse Review and asked the government to consider treating those workers misled by their advisers 'more leniently'. He called on the FST to clarify whether HMRC would investigate those advisers who promoted loan schemes, whether it would seek reparations from them and, if so, whether the revenues raised could be set against the liabilities of those who were encouraged into unknowingly participating in disguised remuneration schemes. He suggested that the government's approach to the loan charge had brought the operation of the tax system into question.

Dr Rupa Huq (Labour) said that she had been 'flooded' with requests from constituents to speak in this debate on the loan charge. She said that HMRC's retrospective approach to the charge had been 'worrying' and criticised HMRC for the aggressive manner with which they were pusuing affected taxpayers, calling on them to adopt a more humane approach in its dealings with affected taxpayers. Huq said that the Morse Review had been 'a start' but noted the concerns of the APPG on the Loan Charge, who had said that it could go further. She said it was very disappointing that the government was not implementing the 'crumbs' of the review and spoke of her concerns that many of the advisers who had promoted the schemes were still in operation. Huq said that HMRC should give those impacted by the loan charge more time to reach 'amicable' arrangements.

On IR35, Huq said that, like the loan charge, the scheme had caused 'pain and strain' for many of her contituents, who had been denied a range of employment schemes. She asked the government had been elected on a pledge to review self-employment and asked the Minister to confirm 'when it will see the light of day'. She also called for the government to undertake a 'full review of tax reliefs'. 

Sir Edward Leigh (Conservative) spoke about tax simplification with a call to the FST to address the issue in his closing remarks. He described the UK's tax code as 'hugely ineffective and inefficient', even after 10 years of Conservative-led government. He pondered whether there was scope to abolish certain taxes and replace these with new charges (although he did not specify which taxes). The result of this, he said, was the creation of an environment ripe for avoidance, which had created an industry that helped people by giving them the opportunity to pay for tax advice and lower their liabilities. He called for a 'simpler, clearer and appropriate' tax system to spur economic activity and promote recovery and suggested that the money saved by people not having to employ tax advisers and accountants could be reinvested in the economy. He also suggested that a simpler tax system could improve fairness and equality by removing opportunities for the wealthier to lower their liabilities.

Ben Everitt (Conservative) welcomed the postponement of the IR35 reforms to next spring, saying that this would provide workers with some reassurance as the economy recovers. He said that while he wished the postponement was a cancellation, there were lessons to be learned and that that the review of the implementation of IR35 in the public sector could provide recommendations for improvement. Like Sir Edward, he said the simplification of the tax system could make it more efficient and more productive.

Contributions from Labour MPs Charlotte Nichols, Taiwo Owatemi and Judith Cummins focused on efforts to ensure that the government's Coronavirus support schemes provided more flexible and helped to prevent mass unemployment.

Responding for the government, Jesse Norman said that the government had announced 'unprecedented' support to support jobs and the economy. He said that it was for the Office for Budget Responsibility to produce forecasts on the impact of the government's schemes, not the Treasury. On IR35, the Minister said that he had been 'pressed vigorously' by colleagues on the matter. He said it would be a 'serious mistake' to remove IR35 reforms (as proposed by Amendments 16 and 17) from the Bill that would cost the country 'many hundreds of millions of pounds'. He said that non-compliance with the rules was expected to cost the Treasury £1.3 billion alone in 2023/24.

Regarding the loan charge, the Minister pointed to David Davis' suggestion of 'zero rights employees', noting that the government already provided contractors with a number of benefits when they were employed as employees of their own personal service company (such as maternity and paternity pay). Mr Norman said that it was 'very important to put on public record' that, in relation to deaths caused by the loan charge, independent investigations had found no link between the conduct of HMRC and these reported deaths. On a review of the Loan Charge, Mr Norman said that the issued exposed 'some of the most egregious and clearest forms of tax avoidance in the system'. He said he found it hard to see how simplification could prevent such abuses. He also took aim at criticisms of the indpendence of the Morse Review and warned that New Clause 31 would 'drive a coach through the horses' by overturning the longstanding principles of the tax system that require individuals to be responsible for their own tax affairs and for there to be as little discretion as possible in the system.

The debate concluded at 8.45pm. Three votes were taken. New Clause 26 was defetaed 339-241. New Clause 1 was defeated 321-232. Amendment 20 was defeated 317-254. 

Liveblog from CIOT External Relations Team: George Crozier, Hamant Verma, Chris Young

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