Finance (No. 2) Bill — Schedule 8 — Taxation of Private Finance Inititative Companies Deemed to be Making Excess Profits — 21 Feb 2018 at 17:47
Zac Goldsmith MP, Richmond Park voted against a review considering a proposal to increase taxes on private sector contractors to the public sector deemed to be making excess profits.
The majority of MPs voted against a review considering a proposal to increase taxes on some private sector (Private Finance Initiative, PFI) contractors to the public sector deemed to be making excess profits.
The proposed review rejected in this vote would have considered the idea of reducing the tax relief available to private contractors to the public sector in respect of interest payments on loans where those contractors are deemed to be making excess profits.
MPs were considering the Finance Bill.
The amendment rejected in this vote was:
- Amendment 3, page 103, line 41, at end insert—
- “21A After section 461 (counter-acting effect of avoidance arrangements) insert—
- “Chapter 11
- 461A Review
- (1) Within six months of the passing of the Finance Act 2018, the Chancellor of the Exchequer shall undertake a review of the effects of amending the operation of this Part in relation to the excess profits of PFI companies.
- (2) For the purposes of the review under this section, it shall be assumed that the operation of this Part would be amended so as to—
- (a) deduct the uncompensated excess profit amount of PFI companies from the aggregate of the interest allowances of the group for periods before the current period so far as they are available in the current period for the purposes of calculating the interest capacity of a worldwide group under section 392 (the interest capacity of a worldwide group for a period of account),
- (b) provide that, for groups that contain a PFI company, the uncompensated excess profit amount for a period is equal to the group excess profit amount less the aggregate amount by which the group’s taxable profit has been reduced in prior periods as a result of such provisions,
- (c) provide that the group excess profit amount for any period will be the aggregate PFI excess profit amount for each PFI company in the group, and
- (d) provide that the PFI excess profit amount for a PFI company for a period will be the amount by which the internal rate of return on shares and related party debt in that company (from inception to the end of the previous accounting period) exceeds the internal rate of return set in the relevant PFI contract or, if no such return was specified, 10%.
- (3) For the purposes of this section, “a PFI company” means a company which has entered into a contract with a public sector body under the Private Finance Initiative or the PF2 initiative.
- (4) The Chancellor of the Exchequer shall lay a report of the review under this section before the House of Commons as soon as practicable after its completion.”
Had it not been rejected this amendment would have added a new paragraph to Schedule 8 of the Bill, which in turn would have added a new section, 461A to part 10 of the Taxation (International and Other Provisions) Act 2010 which itself was inserted by Schedule 5, Part 1 of the Finance (No. 2) Act 2017.
Section 461 provided for adjustments to counteract tax avoidance arrangements.
The rejected amendment was accompanied by an explanatory statement:
- This amendment requires a review about the effects of making provision to discount the excess profits of a PFI company for the purpose of calculating the aggregate of the interest allowance of worldwide groups in the provisions of Part 10 of the Taxation (International and Other Provisions) Act 2010.
During the debate leading up to the vote Stella Creasy MP (Labour/Co-operative, Walthamstow) spoke about the amendment rejected in this vote and said it was:
- about calculating a windfall tax on the companies. It is designed to enable us to work out how much extra they have made from the original deals, and to claw that back by adjusting their tax allowances.
-  Parliament's webpage on the Finance Bill
-  Stella Creasy MP, (Labour/Co-operative, Walthamstow), House of Commons, Official Record, 21 February 2018
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 (No)||Minority (Aye)||Both||Turnout|
|Con||295 (+2 tell)||0||0||93.7%|
|Lab||0||219 (+2 tell)||0||84.7%|