Asked by: Angus Brendan MacNeil (Independent - Na h-Eileanan an Iar)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the effect on (a) long-haul air travel demand and (b) and long-haul connectivity at Scottish airports of the cessation of tax-free shopping for passengers from 1 January 2021.
Answered by Kemi Badenoch - President of the Board of Trade
Ahead of the end of the transition period, the Government has announced the VAT and excise duty treatment of goods purchased by individuals for personal use and carried in their luggage arriving from or going overseas (passengers). The following rules will apply from 1 January 2021:
- Passengers travelling from Great Britain to any destination outside the United Kingdom (UK) will be able to purchase duty-free excise goods once they have passed security controls at ports, airports, and international rail stations.
- Personal allowances will apply to passengers entering Great Britain from a destination outside of the UK, with alcohol allowances significantly increased.
- The VAT Retail Export Scheme (RES) in Great Britain will not be extended to EU residents and will be withdrawn for all passengers.
- The concessionary treatment on tax-free sales for non-excise goods will be removed across the UK.
The Government published a consultation which ran from 11 March to 20 May. During this time the Government held a number of virtual meetings with stakeholders to hear their views and received 73 responses to the consultation. The Government is also continueing to meet and discuss with stakeholders following the announcement of these policies.
The detailed rationale for these changes are included in the written ministerial statement and summary of responses to the recent consultation: https://questions-statements.parliament.uk/written-statements/detail/2020-09-11/hcws448 and https://www.gov.uk/government/consultations/a-consultation-on-duty-free-and-tax-free-goods-carried-by-passengers.
HMRC estimate that VAT RES refunds cost around £0.5 billion in VAT in 2019 for around 1.2 million non-EU visitors. In 2019 the ONS estimate there were substantially more EU visitors (24.8 million) than non-EU passengers (16.0 million) to the UK. This implies an extension to EU residents would significantly increase the cost by up to an estimated £0.9 billion. This would result in a large amount of deadweight loss by subsidising spending from EU visitors which already happens without a refund mechanism in place, potentially taking the total cost up to around £1.4 billion per annum.
The concessionary treatment on tax-free sales currently affects airports that fly to non-EU destinations. The extension of duty-free sales to EU bound passengers will be a significant boost to all airports in England, Scotland and Wales, including Edinburgh and Glasgow and smaller regional airports which have not been able to offer duty-free to the EU before.
HMRC estimate that around £150 million of VAT is not charged as a result of tax-free airside sales. As with the VAT RES, extending the relief to the EU would significantly increase the cost of the scheme and result in a large amount of deadweight loss by subsidising spending from EU-bound passengers which already happens.
The final costings will be subject to scrutiny by the independent Office for Budget Responsibility and will be set out at the next forecast.
The Government also recognises the challenges the aviation sector is facing as it recovers from the impacts of Covid-19 and has supported the sector throughout the pandemic, and continues to do so, including schemes to raise capital, flexibilities with tax bills, and financial support for employees.
Asked by: Angus Brendan MacNeil (Independent - Na h-Eileanan an Iar)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what his Department's definition is of a viable job.
Answered by Steve Barclay - Secretary of State for Environment, Food and Rural Affairs
The Government, through the Job Support Scheme, is targeting support on those businesses that are being impacted by Coronavirus and who can support their employees doing some work, but that need more time for demand to recover.
As the Chancellor said, it is clear we are living with Coronavirus for a while, and therefore, our economy is likely to undergo a period of adjustment and it is right that our approach to economic support evolves.
Asked by: Angus Brendan MacNeil (Independent - Na h-Eileanan an Iar)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, on how many occasions Ministers in his Department have met the Secretary of State for Transport to discuss the effect of the covid-19 outbreak on the aviation industry in each of the last three months.
Answered by Kemi Badenoch - President of the Board of Trade
HM Treasury Ministers have regular discussion with the Secretary of State for Transport on a range of topics.
The Government has announced an unprecedented package of support for workers and businesses to protect against the current economic emergency.
Asked by: Angus Brendan MacNeil (Independent - Na h-Eileanan an Iar)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how many meetings Ministers in his Department have had with representatives of the aviation industry on the covid-19 outbreak in each of the last three months.
Answered by Kemi Badenoch - President of the Board of Trade
Treasury Ministers and officials meet with a wide range of stakeholders across sectors as part of ongoing policy development and implementation.
Ministers and officials from the Department for Transport are in regular contact with airlines, airports and unions to understand the impact that COVID-19 is having on the sector and its workers.
Asked by: Angus Brendan MacNeil (Independent - Na h-Eileanan an Iar)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how often Ministers in his Department have held discussions with representatives from UK airports since the start of the covid-19 outbreak.
Answered by Kemi Badenoch - President of the Board of Trade
Treasury Ministers and officials meet with a wide range of stakeholders across sectors as part of ongoing policy development and implementation.
Ministers and officials from the Department for Transport are in regular contact with airlines, airports and unions to understand the impact that COVID-19 is having on the sector and its workers.
Asked by: Angus Brendan MacNeil (Independent - Na h-Eileanan an Iar)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether his Department has plans to extend eligibility to veterinary practises to business rates relief during the covid-19 outbreak.
Answered by Jesse Norman
Business rates are devolved in Scotland.
In England, the Government has provided enhanced support to the retail, hospitality and leisure sectors through business rates relief given the direct and acute impacts of the COVID-19 pandemic on those sectors.
A range of further measures to support all businesses, including those not eligible for the business rates holiday, such as veterinary practices, has also been made available. For example, the Government has launched the Coronavirus Job Retention Scheme to help firms continue to keep people in employment, the Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank backed by an 80% Government guarantee, and the deferral of VAT payments for this quarter.
The Government will consider any further financial assistance necessary to help businesses get through this period.
Asked by: Angus Brendan MacNeil (Independent - Na h-Eileanan an Iar)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to HMRC's January 2019 Profit Diversion Compliance Facility, what estimate he has made of the value of transactions through transfer pricing arrangements in each of the last five years; how many transfer pricing specialists HMRC employs; and how many transfer pricing investigations HMRC has undertaken in each of the last five years.
Answered by Mel Stride - Secretary of State for Work and Pensions
On 10 January 2019 HMRC introduced a new Profit Diversion Compliance Facility for Multi-National Enterprises using arrangements targeted by the Diverted Profits Tax (DPT) to give them the opportunity to bring their UK tax affairs up to date.
HMRC does not hold the information about the value of transactions through transfer pricing arrangements in each of the last five years.
HMRC has increased the number of staff dealing with international tax risks, including transfer pricing. As at 30 April 2018, there were 365 full time equivalent staff working on international risks, including transfer pricing and DPT. HMRC recognises the importance of identifying and tackling international tax risks and is invested in building the capability of the staff involved. These skilled staff work with other expert industry and tax specialists to tackle those cases that represent a substantial risk of tax loss to the Exchequer in line with HMRC’s “resource to risk” compliance policy.
Transfer pricing investigations include enquiries into tax returns, pre-return investigations, and investigations that precede Advance Pricing Agreements (APAs) or Advance Thin Capitalisation Agreements (ATCAs). The numbers of transfer pricing investigations HMRC initiated in the years 2013/14 to 2017/18 were:
| 2013/14 | 2014/15 | 2015/16 | 2016/17 | 2017/18 |
Number of Investigations | 462 | 427 | 384 | 250 | 244 |
Asked by: Angus Brendan MacNeil (Independent - Na h-Eileanan an Iar)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to HMRC's January 2019 Profit Diversion Compliance Facility, what estimate he has made of the value of transactions under investigation; and how many inquiries resulted in the view that the factual pattern outlined to HMRC at the start of an enquiry did not stand up to scrutiny once tested in each of the last five years.
Answered by Mel Stride - Secretary of State for Work and Pensions
On 10 January 2019 HMRC introduced a new Profit Diversion Compliance Facility for Multi-National Enterprises using arrangements targeted by the Diverted Profits Tax (DPT) to give them the opportunity to bring their UK tax affairs up to date.
HMRC does not hold the information about the value of transactions under investigation.
HMRC does not hold information about how many inquiries resulted in the view that the factual pattern outlined to HMRC at the start of an enquiry did not stand up to scrutiny once tested in each of the last five years.
However, in circumstances where HMRC believes it may have been misled by information provided by customers in the context of transfer pricing investigations, the matter will be referred to its Fraud Investigation Service.
Asked by: Angus Brendan MacNeil (Independent - Na h-Eileanan an Iar)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to HMRC's January 2019 Profit Diversion Compliance Facility, what estimate he has made of the value of the sums recovered from HMRC investigations into transfer pricing arrangements in each of the last five years; how many HMRC investigations into transfer pricing arrangements have been subsequently referred to its Fraud Investigations Service in each of the last five years; and what estimate he has made of the value of HMRC’s current investigations into transfer pricing arrangements.
Answered by Mel Stride - Secretary of State for Work and Pensions
On 10 January 2019 HMRC introduced a new Profit Diversion Compliance Facility for Multi-National Enterprises using arrangements targeted by the Diverted Profits Tax (DPT) to give them the opportunity to bring their UK tax affairs up to date.
In the years from 2012/13 to 2017/18, HMRC secured £6.5 billion of additional tax by challenging the transfer pricing arrangements of multinationals.
Year | 2012/ 13 | 2013/14 | 2014/15 | 2015/16 | 2016/17 | 2017/18 |
Total Amount | £504 m | £1,137m | £707m | £853m | £1,618m | £1,682m |
The information requested regarding how many HMRC investigations into transfer pricing arrangements have been subsequently referred to its Fraud Investigation Service in each of the last five years is not readily available and could only be provided at disproportionate cost. However, in appropriate cases transfer pricing cases are referred to HMRC’s Fraud Investigation Service for their consideration.
HMRC cannot reliably predict the value of its current investigations into transfer pricing arrangements because the outcome is highly dependent on the facts that are determined during the enquiries’ progress.
Asked by: Angus Brendan MacNeil (Independent - Na h-Eileanan an Iar)
Question to the HM Treasury:
To ask Mr Chancellor of the Exchequer, whether he plans to bring forward proposals for a de minimis tax exemption on residual cash balances held in the Share Incentive Plans of employees who terminate participation in such schemes.
Answered by Steve Barclay - Secretary of State for Environment, Food and Rural Affairs
Share Incentive Plans provide companies with flexibility to meet their business needs regarding employee ownership. The Government continues to keep employee share schemes policy under review.