---

Finance Bill

Transfer pricing is horrendously complex and we have heard that it is one of the most common areas of dispute between companies and the Revenue. Given its complexity, it comes as no surprise that it boasts such an unfortunate statistic. We must not lose sight of the vital importance of the venture capital industry. We must bear in mind its enormous importance in economic efficiency, not only as an incubator for encouraging small businesses, but in taking over ailing businesses and turning them into profit-making enterprises. We are extremely lucky to have a flourishing and healthy private equity sector in this country—many western nations would give their eye teeth for such a successful sector. It is worth reminding the Committee that it was one of the Chancellor’s favourite areas a few years ago. He has stopped talking about it, but he used to like to cite the private equity and venture capital industry as a model to be encouraged. He sought to introduce that model in a range of different areas and I recall him lecturing some of our European partners on the importance of the private equity sector. That makes it doubly important for us to examine these provisions with great care. In this part of the debate, I am reminded very much of some of the issues that we discussed in relation to real estate investment trusts: the Government talk about the importance of enterprise and of creating the right climate to encourage enterprises, yet fail to deliver on the detail. Of course, like everyone else in the Committee, I agree completely with the overall aim of closing down tax loopholes that enable companies to avoid an excessive amount of tax. I can agree with the spirit of what the Government are trying to do, but as other Conservative Members said, these anti-avoidance provisions are drawn too widely. I therefore appeal to the Government to consider with great care the clarifications and limits proposed in the amendments. I would not say exactly that the Treasury is taking a sledgehammer to the private equity industry, but the proposals as drafted in the Bill are too wide-ranging and would impact negatively on the venture capital industry without commensurate benefit to the Treasury and taxpayer.