Finance Bill

I agree that one should expect recruitment companies to exercise high standards in the way that they conduct their business, but that does not mean that they should necessarily be liable for the significant tax debts of the people with whom they do business. I do not see how the hon. Gentleman can make that connection. It is one thing to require companies to behave well and in a reputable manner, but why should they be liable for other people’s tax bills? The third party debt provisions are draconian. They seem substantially harsher than the rules that govern the limited context where directors are held personally liable for the debts of their companies. Those connected with or giving advice to contractors operating through service companies will be on risk for potentially huge liabilities, and liable to the last penny of their personal wealth, yet the final version of the legislation is not even in the Bill for us to consider today. Key parts of the legislation that will put the third-party debt rules into effect are to come in via secondary legislation, and we do not have the final version of that. It is unacceptable that such significant risks should be imposed on reputable firms without the certainty of the final version of the legislation. We are supposed to take on trust the promise by the Government that they will take a proportionate approach. Some are not prepared to do so. The risks surrounding the debt transfer rules are a key reason why some people are already winding up their businesses and handing out P45s to their staff. Further detailed consideration is needed of the impact of schedule 3 on tax revenues—the point raised earlier. As I have explained, one of the obvious effects of the provisions is to limit the extent to which freelance workers can outsource the management of their tax affairs. Moving those workers out of companies that are managed by specialist providers and into companies that they run directly themselves could make it more difficult, rather than easier, for HMRC to collect the tax that is due.