Corporation tax: deferral of payment of exit charge

Question proposed, That the clause stand part of the Bill.

With this it will be convenient to discuss that schedule 47 be the Forty-seventh schedule to the Bill.

This is a complicated question, which essentially relates to the UK Government’s implementation of an issue that caused some EU legislation. It is about making the UK EU compliant; I do not wish to throw petrol on the flames of the Government Benches so that they perk up and listen and elongate this debate.

The Minister, in particular, will know that there is some doubt about whether the solution set out in the clause and schedule absolutely implements the spirit of the judgment made in that case. A number of concerns have been voiced by the Chartered Institute of Taxation and the Institute of Chartered Accountants in England and Wales about whether, for example, the proposal to grant a maximum deferral of 10 years is the right one, and whether it properly addresses the problem that was highlighted by that case.

If the Minister has copies of the representations from the Chartered Institute of Taxation and the Institute of Chartered Accountants, I am quite content for him to review those and share with the Committee how their objections are being addressed by the Treasury. That would be sufficient from my point of view. Those are my only questions.

Let me deal directly with those questions. The hon. Gentleman asked about the 10-year maximum deferral period—whether that amounts to an unjustified restriction on companies’ treaty rights—and the concern about whether the clause goes far enough to comply with EU law. We believe that it does; the 10-year deferral period allows business sufficient time to manage issues of cash flow while providing HMRC with certainty and stability in the collection of taxes. The changes are appropriate and proportionate to the objective recognised by the European Court of safeguarding the balanced allocation of powers of taxation between the member states.

We listened carefully to the views of interested parties over the course of the consultation and took on board their recommendations where appropriate. I hope that hon. Members are reassured by that response.

Question put and agreed to.

Clause 226 accordingly ordered to stand part of the Bill.

Schedule 47 agreed to.