Clause 214 - Unauthorised unit trusts

Part of Finance Bill – in a Public Bill Committee am 4:15 pm ar 18 Mehefin 2013.

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Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury) 4:15, 18 Mehefin 2013

The clause will provide the Treasury with a power to introduce regulations on the tax treatment of trustees or unit holders of unauthorised unit trusts at a future date, with effect from Royal  Assent of the Bill. Its aim is to counteract their use for avoidance purposes, which is an aim that the Opposition support.

The tax information and impact note suggests that the provision is intended to help close a tax gap, which is welcome. However, it also suggests that the measure will have a negligible impact on the Exchequer. Given the limited information set out in the note about the tax avoidance aspect of the measure, will the Minister outline how widespread the problem that the measure is intended to deal with is? That would be helpful to the Committee. How much tax does he estimate has been lost or avoided through the use of unauthorised unit trusts? Given that they are expected to have a negligible impact, it would be interesting to see what those calculations have been. In view of HMRC’s low estimate of the tax gap, which currently stands at £32 billion, and given that the tax information and impact note states that this measure will help to reduce it, could the Minister tell us by how much? I appreciate that these measures will be introduced via secondary legislation, given the fast moving nature of collective investment funds. As the use of regulations allow for the changes to be made more quickly, could the Minister give us an estimate of the time scales for the introduction of these measures?