My Lords, the coalition’s programme for government included a commitment to establish a commission to consider the West Lothian question. In January 2012 the Government set up the commission on the consequences of further devolution for the House of Commons. This commission reported last spring and Ministers are currently giving the report the serious consideration that it deserves.

My Lords, the Sentencing Council issued the Offences Taken into Consideration and Totality guidelines in June 2012. They state that a concurrent sentence would be appropriate where,

“offences arise out of the same incident or facts”,

and where,

“there is a series of offences of the same … kind”.

A consecutive sentence would be appropriate where,

“offences arise out of unrelated facts”,

or where the offence,

“qualifies for a statutory minimum sentence and concurrent sentences would improperly undermine that minimum”.

My Lords, the Government have no plans to reintroduce identity cards. Identity cards were abolished in 2010 as part of the Government’s commitment to restore personal freedoms and curtail unnecessary intrusion by the state.

Estimates of tax liabilities at the additional rate of income tax are published in Table 2.6 “Income tax liabilities, by income source and tax band, from 2010-11 to 2012-13” on HM Revenue and Customs’ (HMRC) website^l, set out at the end of this answer.

Statistics are based on the 2010-11 Survey of Personal Incomes (SPI) projected in-line with the Office for Budget Responsibility’s (OBR) Autumn 2012 Economic and fiscal outlook for future years. Statistics based on 2011-12 outturn data and the OBR's March 2013 projections are not yet available.

It is not possible to infer the additional yield from the imposition of the 50% rate from these statistics. However, HMRC’s report “The Exchequer effect of the 50% additional rate of income tax” provides an estimate of this. This showed that the rate raised far less revenue than originally expected. The report is available on HMRC's website².

Current and previous estimates of additional revenue from the 50% income tax rate can be found in the Office for Budget Responsibility's March 2012 Economic and Fiscal Outlook report, “Box 4.2: The additional rate of income tax”³.

This has been recreated in the following table.

£ billion

Outturn

Forecast

Liabilities Basis

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

Underlying Impact of 50p rate: Original Estimate, OBR estimate June 2010 (TIE=0.35)

0.0

2.5

2.5

2.7

2.9

3.2

3.5

Current Costing1

0.0

0.7

0.6

0.6

0.7

0.7

0.8

Difference

0.0

-1.8

-1.9

-2.1

-2.2

-2.5

-2.7

1 Based on the current estimated cost of a reduction in the rate from 50 per to 40%.

Income tax liabilities, by income source and tax band, from 2010-11 to 2012-13

2.6 Income tax liabilities, by income source and tax band. 2010-11 to 2012-13

continued

2012-13 (7)

Amounts, £ million

Starting rate (1) taxpayers

“Savers” rate (2) taxpayers

Basic rate (3) taxpayers

Higher rate (4) taxpayers

Additional rate (5) taxpayers

All taxpayers

Tax liability after allowances given as income tax reductions (6)

Tax on Earnings

Basic rate

.

.

59,600

24,100

1,760

65,400

Higher rate

.

.

.

27,300

11,300

38,500

Additional rate

.

.

.

.

24,500

24,500

Tax on Savings

Starting rate

18

28

32

5

-

64

Basic rate

.

109

638

210

13

971

Higher rate

.

.

.

757

159

916

Additional rate

.

.

.

.

572

572

Tax on Dividends

Ordinary rate

24

579

552

1,120

19

2.290

Higher rate

.

.

.

3,290

736

4.020

Additional rate

.

.

.

.

1,680

1,680

Allowances given as tax reductions

1

21

299

246

857

1,420

Tax liability after allowances given as income tax reduction

42

716

60 800

56,700

40,700

159,900

Average Rate of Tax %

16

58

114

223

406

17.7

Average amount of tax £

183

1,180

2,440

14,700

152,000

5,310

Key

- negligible

. not applicable

Footnotes for table 2.6

(1) Taxpayers with no taxable earnings and total taxable income from savings below the starting rate limit.

(2) Taxpayers with no taxable earnings and total taxable income from savings between the starting rate limit and the basic rate limit and/or dividends at the 10p ordinary rate.

(3) Taxpayers with total taxable income below the basic rate limit.

(4) For 2009-10 taxpayers with total taxable income above the basic rate limit. From 2010-11onwards taxpayers with total taxable income between the basic rate limit and the higher rate limit.

(5) Taxpayers with total taxable income above the higher rate limit.

(6) In this context tax reductions refer to allowances given at a fixed rate, for example the Married Couples Allowance.

(7) Projected estimates based upon the 2010-11 Survey of Personal Incomes using economic assumptions consistent with the OBR’s December 2012 economic and fiscal outlook. These projections fall outside the scope of National Statistics.¹ http://www.hmrc.gov.uk/statistics/tax-statistics/table2-6.pdf² http://www.hmrc.gov.uk/budget2012/excheq-income-tax-2042.pdf³ http://budgetresponsibility.independent.gov.uk/wordpress/docs/March-2012-EFO1.pdf

My Lords, yes.

The issue of whether a particular sum is deductible for tax purposes depends on the nature of the expense and the purpose for which it is incurred.

Damages awarded by a court can be punitive or compensatory. Punitive damages, along with fines and penalties imposed for infractions of the law or regulatory requirements, are not allowable deductions in calculating tax profits. In particular, fines incurred for gross fiscal misconduct will not be deductible. It is only compensatory damages that arise in the ordinary course of business that may be allowable. These principles have applied for many years.

HM Revenue and Customs' (HMRC) administrative systems record the overall profit or loss position of a company in an accounting period, but

do not identify the many individual elements such as income, deductions, reliefs, allowances and others, which give rise to the overall tax position. Companies do provide greater detail of these elements as part of their annual return to HMRC but separating the tax effect of one element, compensation for mis-sold payment protection insurance (PPI), from a wide range of other, often inter-related, elements could only be completed on a company by company basis.

An estimate of the effect on corporation tax receipts of deductions for compensation for mis-sold PPI could, therefore, only be provided at disproportionate cost.

Statistics on corporation tax are published on HMRC's website at: http://www.hmrc.gov.uk/statistics/ct- receipts.htm.

Section 54 of the Corporation Taxes Act 2009 requires that expenditure for which a deduction is claimed for corporation tax purposes is incurred wholly and exclusively for the purposes of the company's trade. HM Revenue and Customs considers that test as part of its normal risk assessment process when reviewing corporation tax returns

However, the requirement is of very limited use, in the context of transfer pricing and the countering of base erosion and profit shifting, as it is an all or nothing test. It considers the purpose of the expenditure rather than the quantum and a payment from a company which is a member of a group to another company within the same group will be very unlikely to fail that test.

Along with most major economies in the world, the UK charges corporation tax on profits derived from economic activity carried out in the UK, not on sales or turnover.

The UK system is based on internationally agreed principles that determine how much profit each country should tax. The Government are alert to the risk that some companies may try to structure their affairs so that profits from UK-based economic activity are not taxed here. The UK has specific tax rules to combat tax avoidance by international companies; and supports the G20 endorsed international action on base erosion and profit-shifting.