Finance Bill 2013-14 to 2014-15 — New Clause 1 — Corportation Tax Arrangments for Oil Industry Asset Hire Operations — 2 Jul 2014 at 17:30
Zac Goldsmith MP, Richmond Park voted for changes to the Corporation Tax system aimed at ensuring a fair amount of tax is paid in the UK in relation to the hire of assets used in the oil exploration and exploitation industry which are often owned by companies in jurisdictions with lower corporation tax rates than the UK.
The majority of MPs for changes to the Corporation Tax system aimed at ensuring a fair amount of tax is paid in the UK in relation to the hire of assets used in the oil exploration and exploitation industry which are often owned by companies in jurisdictions with lower corporation tax rates than the UK.
The majority of MPs voted to cap the proportion of the money a UK based contractor middle-man spends hiring assets to hired on to be used in oil related exploration or exploitation activities which can be claimed as a deductible expense against their profits for corporation tax purposes.
Examples of the assets in question include drilling rigs and accommodation vessels.
MPs were considering the Finance Bill. The proposed new clause supported by the majority of MPs in this vote was:
- Schedule (Oil contractors: ring-fence trade etc) contains provision about the corporation tax treatment of oil contractor activities.’
This new clause would have had brought a proposed new schedule into effect. The related new schedule, described as New Schedule 1 (NS1) on the amendment sheet for the day's consideration of the Bill provided for amendments to the Corporation Tax Act 2010.
Speaking in the debate prior to the vote David Gauke MP (South West Hertfordshire, Conservative) explained the purpose of the provisions saying:
- New clause 1 and new schedule 1 make changes to provide a fair amount of taxation for activities carried out on the UK continental shelf in connection with the UK’s oil and gas resources. The Government are committed to maximising the benefits that the North sea can bring to the UK economy while ensuring that all companies benefiting from the UK’s natural resources, either directly or indirectly, pay their fair share of tax.
- The UK is not currently receiving a fair amount of tax from companies that provide drilling rigs and accommodation vessels to the oil and gas industry. Many of those companies own their assets in lower tax jurisdictions overseas. Those assets are then leased to associated entities operating on the UK continental shelf through specialised leasing arrangements know as bareboat charters, giving rise to a large deductible leasing expense in the UK. That results in up to 90% of operating profit made in the UK being moved overseas.
- This measure will cap the amount the UK base contractor can claim as a deductible expense for those leasing payments. It will ensure that companies pay a fair amount of tax for the activities they carry out in connection with the UK’s valuable natural resources.
In the proposed new schedule the cap was described as a "hire cap".
-  Parliament's webpage on the Finance Bill 2013-14 to 2014-15
-  Page of amendment papers for consideration of the Finance Bill 2013-14 to 2014-15 on 2 July 2014
-  David Gauke MP (South West Hertfordshire, Conservative), House of Commons, 2 July 2014
Votes by party, red entries are votes against the majority for that party.
What is Tell? '+1 tell' means that in addition one member of that party was a teller for that division lobby.
What are Boths? An MP can vote both aye and no in the same division. The boths page explains this.
What is Turnout? This is measured against the total membership of the party at the time of the vote.
|Party||Majority (Aye)||Minority (No)||Both||Turnout|
|Con||251 (+2 tell)||0||0||83.0%|
|PC||0||0 (+1 tell)||0||33.3%|
|SNP||0||5 (+1 tell)||0||100.0%|
|Malcolm Bruce||Gordon||LDem (front bench)||no|
|Robert Smith||West Aberdeenshire and Kincardine||LDem (front bench)||no|