Draft Risk Transformation Regulations 2017 Draft Risk Transformation (Tax) Regulations 2017

Kirsty Blackman Excerpts

Wednesday 29th November 2017 General Committees

[Kirsty Blackman (Aberdeen North) (SNP)]

It is an absolute delight to be on a Delegated Legislation Committee. It has been far too long since I had the pleasure of coming to one of these rooms to discuss something incredibly technical. I have several questions for the Minister, following what the hon. Member for Amber Valley said about attracting this kind of work and these kinds of opportunities to the UK.

I am not exactly clear why this stuff does not take place in the UK already, or about the Government’s moves relating to the tax treatment and the enabling legislation that the Minister talked about. This measure was mooted in the Budget in 2015, and this is the follow-through. My concerns are about the assessment of its impact. The legislation has been presented to us, but I am not clear how much tax will come to the UK Treasury as a result of it and what the economic benefits will be. How many jobs will it create, if any?

I am also not clear about the issues that the insurance industry is set to face with Brexit, which the shadow Minister alluded to. It is incredibly concerned about dropping off the cliff edge because of the legislation that means that it can no longer communicate with customers who do not live in the UK if we do not have a deal that covers that with the EU. I am not clear whether this will do any good in countering those issues and concerns—particularly those relating to Brexit.

I am not clear about why this should be exempt from corporation tax. Like the hon. Member for Amber Valley, I have concerns about creating something new that is exempt from corporation tax. I would welcome the Minister’s views on how the Government will ensure that this statutory instrument is used only by the companies and organisations that should be using it.

The shadow Minister called for an assessment, to be published fairly quickly, of the impact of the regulations—an assessment not just of how many times the legislation is used, but of the tax-take that has been lost and the economic benefit that has arisen. Given the Government’s focus on job numbers, it is really important that that comes out more when we discuss new regulations and vehicles.

I think the Minister pretty much answered the question about the requirement to deduct income tax. I understood from what he said that the income tax will be paid by the people who receive it, whichever country they happen to be in. That is why the protected cell company does not need to deduct income tax.

My last question is about the consultation responses. The papers we have state that the 19 consultation responses were largely positive and in favour of the proposal. It would be useful if the Minister could tell us how many consultation responses were sought and/or received from organisations that are not set to benefit directly from the regulations. It would be useful to know how many people who do not have a beneficial interest in them responded to the consultation. If the respondents were all people who will benefit, of course they are going to write back and say, “It’s a wonderful thing.” It would be useful to have a bit more clarity about that. I am sorry I have given the Minister an absolute string of questions, but that is the technical nature of DL Committees.