Clause 32, as we have heard, is part of a group of clauses, which addresses, in broad terms, the way in which corporation tax loss relief can be used in a manner that is not consistent with Parliament’s intentions, and the principles behind loss relief. I will not run through the full background again as I did with clause 29, but I will set out a little detail about clause 32, which relates to one of those loopholes.

Loss relief legislation, in part 14 of the Corporation Tax Act 2010, contains rules to counter profitable companies buying losses from unconnected companies. Broadly, the rules apply to restrict relief if there is a change of ownership of a company and, within three years of that change, the trade or business that it carries on undergoes a major change.

Part 22 of the Act contains rules to enable transfers of trades within any group to occur without restricting or removing the ability to relieve losses. However, an anomaly in the way in which these two parts interact means that the loss-buying rules can be sidestepped if transactions are undertaken in a set order: if an intra-group transfer of a trade took place before the change in ownership of a company, the loss-buying rules applied, but if the trade occurred after the change in ownership, they did not. That has allowed, in certain circumstances, an acquiring group to access relief for losses that it should not otherwise have had.

The clause moves to address that loophole by inserting a new section 676 into part 14 of the Act, which will restrict relief for losses whether the intra-group transfer of the trade occurs before or after the company’s change of ownership. It will prevent the acquiring group from structuring the acquisition of the loss-making company so as to access relief for losses it should not otherwise have. New section 676 will have effect in relation to any change of ownership of a company that occurs on or after 20 March 2013, the date on which the change was announced in the Budget.

I was asked how many companies are likely to be affected by the proposals. I cannot answer that precisely, because it depends on companies’ future tax planning choices. I do not have to hand the exact total of recent cases of which HMRC has become aware, but it has seen an increasing number of such cases recently, which is why the Government have taken action to close the loopholes. No figures have yet been collated on how much revenue has been lost to the Exchequer, but the potential problems have been documented by way of companies undertaking reconstructions. Unfortunately, I cannot give precise answers to the hon. Lady’s questions, but there is support across the Committee for ensuring that loss-relief rules more closely reflect their underlying principles and, in so doing, provide a valuable protection to the Exchequer.