UK Finance Bill Begins Passage Through Parliament

by Jason Gorringe, Tax-News.com, London

10 April 2001

The UK's Finance Bill 2001 began its journey through Parliament yesterday, with the Treasury saying that as a result of the delay caused by the foot-and-mouth epidemic it might succeed in passing the whole Bill before the legislative process is suspended for the election and Parliament is prorogued.

In fact, foot-and-mouth dominated the proceedings, with leading Tories calling for measures to be added to the Bill to support the beleaguered countryside. Oliver Letwin, shadow chief Treasury secretary, said foot-and-mouth measures were an "astonishing omission" from the bill. He proposed steps to speed up value added tax refunds and allow farmers and hoteliers to make provisional claims against income tax liabilities.

One good idea put forward by Michael Jack, MP for Fylde and a member of the agriculture committee, is to extend two tax relief schemes for private investors to allow money to be injected into farming and the rural economy. Enterprise investment schemes and venture capital trusts bar investors from putting money into farming and land (as well as businesses in the finance sector).

Enterprise investment schemes, which are discretionary share option schemes for smaller businesses, which were created in last year's Finance Act, already feature in the Bill with an increase in the flexibility of issuance of options, so it would be easy to add a new clause extending the scheme to agricultural and food processing companies. Including agriculture in the permitted objects of venture capital trusts might be more problematic and open to abuse, since land has been a favourite tax haven in the past, through forestry and other activities which efficiently turn income into capital.

Other aspects of the Bill came in for criticism by the Opposition. called the government's aggregates levy a "stealth tax" on land and construction and called for further changes to the tax regime for multinational companies. Mr Letwin said the aggregates levy would depress land prices and inflate construction costs, and set a precedent for taxing extraction of natural resources on private land.

Although the Government has a massive majority in the Commons, the Treasury's hopes for a fast passage depend on the Tories' attitude. They say they will not "unnecessarily" delay it.

Recommended