Income Tax — House of Commons, 2019-07-03
Topic: Macroeconomics
Peter Christopher Dowd (Labour, Centre-left): I do not think it is a question of requisitioning; it is about a different approach and taking a different look at engaging workers in our economy. That is it—it is as simple as that. I appreciate and completely accept that the hon. Gentleman does not accept the concept, but that does not mean that the concept is wrong The Government boast about their corporation tax giveaways, but it is clear that even those billions, stripped from our public services, are not enough to satisfy their intentions in relation to corporate welfare. Furthermore, it seems that, in their rush to hand out giveaways, they have given no consideration to how this measure will fit into the already complex and convoluted system of capital allowances. It is not necessarily a question of saying whether I agree or disagree with these things; it is a question of saying we have a convoluted system—and it is incredibly complex. We do not have any review mechanisms of these reliefs, and we do not have any sunset clauses on them—in fact, we have debated that in Committee in the past, but the Government seem to have no response This new measure on structures and buildings allowances will, as the Minister said, provide relief for qualifying expenditure on new non-residential structures and buildings incurred on or after 29 October 2018 on a 2% per annum, straight-line basis. At the Finance Bill earlier this year, the Government blocked our attempts to require Ministers to publish details of the likely take-up of this new allowance across different-sized businesses Despite those concerns, the secondary legislation before us remains vague, with important definitions that would assist in addressing areas of ambiguity delayed and deferred to guidance. We have had lots of this deferral to guidance, secondary legislation and other things—potentially even tertiary legislation in due course. It really is not good enough. We need transparency and openness; we do not need to be told, "This is going to happen, but the detail may come a little later on." Similarly, the decision by Ministers to delay finalising the details of this new allowance until June, when the final stages of the Finance Bill took place in January, is yet further evidence of the continued environment of uncertainty that business is forced to operate in under this Government The Chartered Institute of Taxation rightly criticised the Government over these new regulations, stating at the time of the 2018 Budget that "it is neither sensible nor responsible for the government to introduce reliefs into the tax system at a time before they have consulted upon the scope and application of the relief or fully considered, and are therefore able to legislate for, the details of the relief." It concluded that these regulations will only complicate matters, particularly given that plant and machinery are excluded. That means that taxpayers are still required to identify the plant and machinery in buildings, with the same grey area that currently exists between buildings, fixtures, plant and machinery. The administration of this new allowance will be substantial and burdensome for businesses, flying in the face of the Government’s initial promise to simplify the tax system The demotion of much of the detail of this allowance to secondary legislation remains of great concern to the Opposition, particularly given that capital allowances are yet another means of extending tax breaks to large businesses, many of which do not necessarily need the relief. The reality is that many small and medium-sized businesses that desperately need support from the Government will struggle to access this relief without incurring substantial costs as a result of hiring tax experts to guide them through its complexities Rather than continuing this piecemeal approach, which seems only to confuse and deter businesses in need, Labour remains committed to carrying out a review of tax reliefs once in government to evaluate individual reliefs against their effectiveness and value for money. It seems that, again, this opaque Government will not commit either to a proper review of the measure before us or to a wider review of the full plethora of their corporate relief giveaways. This is no way to run the country. Once again, the devil will be in the detail of the guidance that HMRC publishes, particularly when it comes to what constitutes qualifying expenditure, the definitions of terms such as "dwelling-house" and "mixed-use building", and clarification of the treatment of successive leases and the new flexible rules in instances where expenditure is incurred after a building comes into use Although the Opposition remain sceptical about the introduction of yet another poorly-considered allowance on top of the 1,200 allowances that already exist—many of which have existed for decades without review—we will not be voting against the secondary legislation today. Instead, we will wait to scrutinise the guidance when HMRC publishes it later this year. [Interruption.] I can hear Ministers sniggering. A responsible Opposition will vote against something when they disagree with it and will support something when they agree with it. When we want to consider the detail, implications and other information that comes from the Government, we will hold back. That is what a responsible Opposition should do—not automatically vote against or support things willy-nilly—and that is what we are trying to do, because we are being responsible. Ministers can snigger at that responsible approach if they want to, but we will continue to be responsible, and we will continue to oppose this Government as and when we feel it is necessary to do so.