The government’s new diverted profits tax (DPT), which was initially announced in December’s Autumn Statement and comes into effect on 1 April 2015, was debated in the House of Commons on 7 January 2015. Conservative MP Nigel Mills opened the debate, observing: ‘It is not often we get whole new taxes in this country, and I thought we should mark this one with a bit of parliamentary scrutiny, because I fear it will sneak through in the pre-election wrap-up Finance Bill and will not get much debate in Committee. It would therefore be helpful for Parliament to have a bit of a chance to work out the government’s intentions and exactly where they intend this tax to go.’
Mills went on: ‘If we judge government measures by how balanced the reaction to them is, this tax has probably gone down about right with people: some advisers regard it as the worst-drafted legislation in some time, while some have said it is relatively narrow and focused – there has even been a cautious welcome from Richard Murphy, although he is perhaps thinking again about that. Another tax campaigner, David Quentin, regards the tax as “widely and aggressively drafted” with “a penally high rate”. If we take the average of all those reactions, it is probably about where the government would want it to be. It appears that the tax will deter some people from doing some things, but it will not do so ridiculously little that it destroys the UK tax regime, so we are perhaps starting in the right place.’
Mills also added that Treasury tweets suggested that ‘this tax “isn’t ever really meant to apply to anyone. We hope everyone will change their behaviour … It’ll be a big stick that never actually gets wielded”,’ while Jim Shannon, member of Parliament for the DUP, welcomed the introduction of the new tax, but observed that ‘the Chancellor said that this new legislation will bring in £1bn over five years, although others have said that they are not sure whether it is workable.’ Meanwhile, his DUP colleague David Simpson argued that if HMRC ‘had been doing its job in the first place, there would be no call for this new tax. HMRC does not seem to go after the large companies that avoid paying tax, but it does go after the medium-sized to small companies, and that is unfair. What we really need is a level playing field’.
Other concerns that were raised in the debate were: how the new tax would fit in with the OECD’s BEPS implementation; provisions to protect against ‘brass plating’; issues around the collection of the tax; the impact of the behaviour of other tax jurisdictions (particularly low-tax jurisdictions) on the UK; whether the tax would target the right persons; and concerns over the speed of new legislation coming into force.
The government’s new diverted profits tax (DPT), which was initially announced in December’s Autumn Statement and comes into effect on 1 April 2015, was debated in the House of Commons on 7 January 2015. Conservative MP Nigel Mills opened the debate, observing: ‘It is not often we get whole new taxes in this country, and I thought we should mark this one with a bit of parliamentary scrutiny, because I fear it will sneak through in the pre-election wrap-up Finance Bill and will not get much debate in Committee. It would therefore be helpful for Parliament to have a bit of a chance to work out the government’s intentions and exactly where they intend this tax to go.’
Mills went on: ‘If we judge government measures by how balanced the reaction to them is, this tax has probably gone down about right with people: some advisers regard it as the worst-drafted legislation in some time, while some have said it is relatively narrow and focused – there has even been a cautious welcome from Richard Murphy, although he is perhaps thinking again about that. Another tax campaigner, David Quentin, regards the tax as “widely and aggressively drafted” with “a penally high rate”. If we take the average of all those reactions, it is probably about where the government would want it to be. It appears that the tax will deter some people from doing some things, but it will not do so ridiculously little that it destroys the UK tax regime, so we are perhaps starting in the right place.’
Mills also added that Treasury tweets suggested that ‘this tax “isn’t ever really meant to apply to anyone. We hope everyone will change their behaviour … It’ll be a big stick that never actually gets wielded”,’ while Jim Shannon, member of Parliament for the DUP, welcomed the introduction of the new tax, but observed that ‘the Chancellor said that this new legislation will bring in £1bn over five years, although others have said that they are not sure whether it is workable.’ Meanwhile, his DUP colleague David Simpson argued that if HMRC ‘had been doing its job in the first place, there would be no call for this new tax. HMRC does not seem to go after the large companies that avoid paying tax, but it does go after the medium-sized to small companies, and that is unfair. What we really need is a level playing field’.
Other concerns that were raised in the debate were: how the new tax would fit in with the OECD’s BEPS implementation; provisions to protect against ‘brass plating’; issues around the collection of the tax; the impact of the behaviour of other tax jurisdictions (particularly low-tax jurisdictions) on the UK; whether the tax would target the right persons; and concerns over the speed of new legislation coming into force.
