Finance (No. 2) Bill (Sixth sitting) 2026-02-03

Clauses define promotion but lack clear definitions of 'marketed' and 'likely to be' marketed. There is a concern that vague wording could accidentally catch normal tax advice. The Government should tighten up the wording, provide specific details, consider public hearings, and ensure protections for advisers who make errors.

Supports Mark Garnier's concerns about lack of consultation and advocates for holding public hearings before Finance Bill’s consideration in Committee to interrogate industry concerns more thoroughly.

Clauses establish new criminal prohibitions on promoting tax avoidance arrangements, creating personal criminal liability for company directors and shadow members. Concerns about the breadth of criminal liability, lack of safeguards, unclear definitions of shadow members, and limited guidance from HMRC are raised.

Concerned that prosecuting those who promote schemes may turn innocent recipients into victims. Emphasises the need to distinguish between genuine tax advisers making mistakes and those promoting unlawful activity.

Ms Rigby discussed promoter action notices, highlighting they are legal notices requiring businesses to stop providing goods or services used in the promotion of tax avoidance. She noted such a notice can only be issued if there is a breach of a stop notice or prohibition on promoting certain tax arrangements.

Mr Garnier supported HMRC's work to protect the public from promoters but expressed concerns about the wide scope and potential impact on legitimate actors. He noted a tax gap of £500 million related to marketed avoidance schemes sold by approximately 20-30 active promoters, questioning how clauses would address offshore promoters.

Mr Wild inquired about the practicality and enforceability of the measures proposed against offshore promoters. He also questioned whether a UK-based promoter could move operations offshore to avoid scrutiny under these clauses.

Introduces new powers for HMRC to issue anti-avoidance information notices, designed to tackle persistent tax avoidance by promoters exploiting loopholes. The clauses define key terms and empower HMRC to issue information notices to connected persons suspected of involvement, third parties holding relevant information, and financial institutions with tribunal approval.

Raises concerns about the clarity of clause 182 regarding recipients' ability to seek legal advice and recommends adding 'making representations against the notice.' Also highlights that legal professional privilege does not extend to tax advisers or accountants, potentially disincentivising people from seeking such advice. Requests a rationale for protecting legally privileged material but excluding other types of advice.

Responds that clause 182(2) provides sufficient scope for recipients to disclose information for legal advice and will consider the shadow City Minister's recommendations. Explains civil penalties for non-compliance, including daily penalties for ongoing breaches.

Clauses 206 to 219 make changes to ensure HMRC can publish details of legal professionals involved in tax avoidance schemes, grant HMRC authority to assess penalties directly, and tackle fraud in the construction industry scheme. The clauses aim to protect the Exchequer from serious non-compliance, prevent large sums of money from going to organised criminal gangs, and create a level playing field for those operating in the construction industry.

Supports the measures introduced by clauses 206 to 219. Highlights that clause 207 introduces a penalty of £10,000 for lawyers who make deliberately false declarations and raises concerns about the clarity of terminology used in the clauses.

HMRC is not a regulator that looks at the quality of tax advice, but it has regulatory powers similar to other regulators. The measures penalise advisers without providing mitigation factors like appeal rights.

The Government does not seek to regulate tax advisers in terms of their qualifications or professional conduct. They aim to ensure minimum standards are met through registration conditions and provide safeguards against arbitrary decisions.

Recalls the history of the retail distribution review, noting unintended consequences that led to a significant drop in wealth management access. Expresses concern that similar issues may arise from clauses 220-229, urging the Minister for targeted action and impact reviews.

Opposition Members are concerned about the Bill's lack of protection against minor breaches, citing the ICAEW's view that these clauses are 'existential' for adviser firms. They argue that £1 mistakes could force reputable firms to cease trading and cause undue hardship.

The Minister reassures the House that HMRC will use its powers reasonably and proportionately, offering opportunities for compliance before suspending an adviser. He mentions ongoing engagement with stakeholders like ICAEW to ensure the policy is balanced.

Questions the Minister about specific clauses that could result in suspension due to minor breaches, despite HMRC's reassurances of reasonable and proportionate actions. He cites a clause stating an authorised officer can suspend registration if not satisfied with compliance.

Reiterates that HMRC will only suspend advisers after due process, including opportunities to explain and comply. He emphasises the importance of ensuring bad actors are excluded from interacting with HMRC.

Highlights the complexity of the tax code and the potential unintended consequences of the bill. He stresses the need for clarity on registration requirements, response times to applications, and robustness in issuing compliance notices.

Responds by detailing HMRC's adherence to reasonable engagement practices. He notes that guidance will be published soon, providing time for advisers to prepare and clarifying that penalties should adhere to relevant tax provisions.

Asks the Minister about mechanics of registration requirements by May and targets for HMRC responses. He questions clarity on how or when advisers need to register, and seeks assurances on response times for applications.

Reaffirms HMRC's commitment to reasonable engagement practices and the importance of timely guidance publication. He acknowledges the need for clear communication and sets out targets for digital interactions and response times.

Raises concerns about compliance notices and ineligibility orders, stressing the importance of clear timeframes and mechanisms to cancel orders if found unjustified. He emphasises that initial sanctions could unfairly damage reputations.

Responds positively to considerations raised, noting HMRC's commitment to reasonable and proportionate actions in suspending advisers. He reiterates the need for adherence to standards and expectations.

Describes the provisions for assessment and notification of penalties in clauses 238-240. Explains review and appeal processes detailed in clause 241 including temporary relief conditions. Outlines measures to ensure tax adviser registration from May 2026 with disclosure obligations under clauses 242-246. Emphasises the need for strengthened powers against dishonest advisers as per clauses 247 onwards.

Expresses concern about the independence of the tribunal mentioned in schedule 20. Questions whether it is truly independent or merely equivalent officers making decisions, suggesting that truly independent persons outside HMRC should be involved for fair assessment.

Highlights issues with the review process under paragraph 6(7) of schedule 20 and questions conflicts of interest in granting temporary relief from suspension. Raises concern about insufficient time given for tax advisers to register as required by May 18, 2026.

Explained that the Government's decision to change 'dishonest conduct' rules to 'sanctionable conduct' rules aims to target bad actors more effectively. Stressed that HMRC will need to demonstrate intention to cause a tax loss, not simply prove dishonesty.

Critiqued the Government's decision to change 'dishonest conduct' rules to 'sanctionable conduct' rules. Argued that this lowers the threshold for sanctions and introduces ambiguity, causing concern in the tax profession.

Expressed concerns about the clauses moving from 'dishonest conduct' to 'sanctionable conduct', highlighting it as a significant shift that could catch technical differences and genuine errors. Urged the Minister to engage further with industry stakeholders before Report stage.

Defended clause 251 which updates the fiscal cycle, reducing OBR's minimum number of assessments from two to one per financial year. Argued that this will create a more predictable framework and strengthen economic stability.

Strongly criticised clause 251, arguing it reduces the OBR's ability to hold the Government accountable by limiting fiscal assessments to once per year. Emphasised the importance of regular oversight and transparency.

He supported the measure but raised concerns about IT literacy among some taxpayers and the need to support those who struggle with digital systems.

He expressed confusion over the schedule's content, questioning its legality under GDPR and the lack of appeal mechanisms for data holders. He viewed it as draconian and arbitrary.

Responded to Martin Wrigley by explaining that HMRC will continue to accept information in traditional formats, ensuring compatibility with less tech-savvy taxpayers. She emphasised the programme's compliance with GDPR.

Asked for clarification on the schedule's content and its legality under GDPR, expressing concerns about potential data privacy issues and lack of appeal mechanisms.

Elaborated on clauses 253 to 258 which aim at digitalising tax reporting. She assured that HMRC will continue to accept traditional forms and address issues of financial inclusion.

He appreciated the Government's continuation of previous initiatives but questioned the £1,000 penalty for non-compliance with digital contact details. He requested a review on whether this fine is too high.

Expressed concern over HMRC’s inability to answer 20% of calls and proposed setting up a priority phone line for retirees.

James Wild argued that the existing system penalizes low-income individuals who owe no tax, citing a case where a woman received penalties despite owing no tax. He proposed an amendment to ensure no penalty points are issued when there is no tax liability due, emphasising fairness and compliance.

Mr Reynolds supported Opposition amendment 50, arguing that penalizing late filing should focus on those avoiding tax obligations and not apply to administrative delays when no tax is owed. He noted the importance of focusing HMRC resources on collecting taxes rather than punishing paperwork for no revenue.

Lucy Rigby welcomed changes that ensure penalties are fairer and more proportionate across the tax system. She rejected amendment 50, emphasising the need to protect the Exchequer from error and fraud through timely tax returns.

Welcomes the introduction of clauses but seeks reassurance on multiple five-year extensions, requests HMRC to publish clear criteria for modifying or revoking clearance, and asks for a commitment to proper consultation before any changes are made.

Responds that the Government will review the £1 billion threshold after one year of operation, no limit on extensions exists, and draft guidance is available. Supports clauses for cryptoasset reporting framework to streamline HMRC data collection.

Questions the differentiation between cryptoassets and stablecoins or tokenised currencies, expresses concern about over-regulation potentially making UK less competitive internationally, and seeks further clarification on definitions of cryptoassets under CARF.

Supports clause 274 which gives power to test a new digital service for securities transfer charge as part of stamp tax modernisation project, aiming to reduce processing times and ensure the service functions correctly.

Supports the modernisation work of clauses 274 to 279, particularly clause 275 which extends oversight in Northern Ireland. Proposes new clauses for reporting on various impacts such as business investment levels, winter fuel payment charge impact, and environmental objectives.

Asks a clarifying question about the stamp duty clause 274 mentioned by James Wild.

Thanks the shadow Minister for engagement and looks forward to further discussions on the Bill's provisions.

New clauses aim to require the Chancellor to assess impacts on businesses and households, including small businesses. Growth has flatlined; GDP grew by only 0.1% in November; inflation is above target causing a collapse in business confidence; small businesses face high costs from taxes and the Bill adds burdens.

Recognises intention behind proposals, focuses on certainty and stability for businesses through corporate tax road map. Emphasises need to raise revenue sustainably to fund public services; intends to hit fiscal rules with more headroom than 2024 Budget.

Argues for new clauses, highlights OBR's confirmation that real household disposable income per person will fall dramatically due to slower wage growth and rising taxes. Measures in the Bill directly impact households leading to higher borrowing.

Challenges Opposition to scrutinise Government’s record on living standards, noting that under previous Government there was a deep squeeze on living standards; contrasts with rising wages and falling interest rates in this Parliament. Rejects new clause.

Reiterates OBR’s prediction of 0.25% growth over forecast period, notes previous decade's average was higher; calls on Minister to publish full assessment as per new clause.

Asserts Government's focus on raising living standards, citing economic stability brought by the Bill and other measures. Rejects claim of economic mismanagement.

Proposes new clause requiring Chancellor to review effects of Act on administrative burdens faced by businesses including impact on SMEs and mitigation measures.

Thanking the shadow Exchequer Secretary for his engagement and diligence throughout the Committee’s six sittings, Dan Tomlinson highlighted the detailed administrative burdens associated with tax changes as detailed in the Tax Information and Impact Notes. Despite not having a combined estimate of how much all measures in the Bill will cost UK industry at hand, he promised to seek out this figure adjacent to the voting Lobby.

Expressing surprise at the Minister's ability to speak with a straight face after his earlier comedic comments about carbon taxes, James Wild thanked all members of the Bill Committee for their engagement and diligent work. He also highlighted the thorough scrutiny performed by Billy Falcon in his office, expressing intent to press new clauses to a vote due to lack of global figures from the Exchequer Secretary.