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Finance Bill 2019 completes Commons stages

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At report stage on 8 January, MPs agreed a cross-party amendment to clause 89 (minor amendments in consequence of EU withdrawal), making the clause subject to the affirmative procedure. This will prevent the government using regulations to implement relevant tax provisions in consequence of a ‘no deal’ Brexit without the explicit consent of Parliament. The amendment permits the government to make regulations under cl 89 only where one of the following options is satisfied:

  • the House of Commons has approved a negotiated withdrawal agreement and a framework for the future relationship;
  • the government has sought an extension of the article 50 period; or
  • the House of Commons has approved leaving the EU without a withdrawal agreement and framework for the future relationship.

The amendment was carried with 303 votes for and 296 against.

Jonathan Reynolds (Lab) said cl 89 as it stood gave the government ‘power to amend tax legislation without any of the usual due process in the event that the UK leaves the EU without a deal’. He added that the amendment, supported by the chairs of the Treasury committee, the Exiting the European Union committee, and the Business, Energy and Industrial Strategy committee, ‘offers Parliament a chance to make a clear statement rejecting a no-deal outcome’.

Sir Oliver Letwin (Con) described cl 89 as an ‘abundance of caution’ clause, giving ministers ‘some unspecified powers in case the lack of unspecified powers turned out to be important’. Letwin did not think the amendment would, in itself, have a very great impact, but was important for setting a precedent, ‘which is that on any power taken in any Bill in relation to the exit of the UK from the EU, if there is a majority in the House today and there continues to be majority against no deal, it will be possible to bring forward similar amendments’.

The government decided not to oppose the cross-party group’s new clause titled ‘Review of changes made by sections 79 and 80’. The financial secretary, Mel Stride, said that while a report by March 2019 ‘will come too soon for the measures to have had a real effect, the government of course remain committed to setting out the rationale for their policies as well as their impact’. However, the minister defended the government’s position on the loan charge, refuting accusations that HMRC’s measures are retrospective.

Conservative former minister and chair of the Treasury committee, Nicky Morgan, while not supporting the new clause, took the opportunity to set out her concerns about the loan charge legislation. She said that legal time limits within which HMRC can open inquiries and make tax assessments ‘are seen as valuable taxpayer protections, giving a degree of certainty that takes appropriate account of taxpayer behaviour’. On the other hand, ‘HMRC’s contractor loan settlement opportunity requires people who want to put their affairs straight to waive those protections, with the threat of the loan charge looming over them’.

Morgan added that: ‘It is not clear why it is necessary for that settlement opportunity to pressure people into paying tax for years that HMRC calls “not protected”, years where HMRC is out of time, even though it may have had the information it needed to open inquiries or raise assessments at the proper time’.

The following government amendments were also agreed:

  • Sch 15 (entrepreneurs’ relief), two amendments introducing an alternative test into the definition of ‘personal company’ which can apply instead of the original two tests introduced by the Schedule. This alternative test is based on the claimant’s entitlement to a 5% share of disposal proceeds in the event of the company being sold;
  • cl 25 (intangible fixed assets: exceptions to degrouping charges etc), three amendments clarifying the wording of the exception from the degrouping charge where a company leaves a group as a result of a share disposal that qualifies for the substantial shareholding exemption; and
  • new clause and schedule (intangible fixed assets: restrictions on goodwill and certain other assets), re-introducing relief for acquired goodwill in the acquisition of businesses with eligible intellectual property from 1 April 2019. The government announced its intention at Budget 2018 to introduce this amendment during the passage of the Bill.

HMRC has also published a tax information and impact note, Reform of tax relief for goodwill amortisation in the corporate intangibles regime, explaining the new relief (

The Bill passed its third reading, which completes the House of Commons stages and means no further amendments can be made before royal assent.