§ Mr. OttawayTo ask the Chancellor of the Exchequer what is the basis for the revision of the figure for the expected revenue in 2000–01 from his changes to the tax and national insurance treatment of personal service companies between table 1.11 of the 1999 Budget report and table A2.1 of the 2000 Budget report. [117302]
§ Dawn PrimaroloThe estimate of extra revenue generated in 2000–01 from the pre-announced measure to tackle avoidance of tax and National Insurance Contributions (NICs) through the use of personal service companies is based on new, more up-to-date information which has been collected by the Inland Revenue since Budget 1999.
§ Mr. OttawayTo ask the Chancellor of the Exchequer what factors underlay his estimate of the fall in revenues resulting from his changes to the tax and national insurance treatment of personal services between 2001–02 and 2002–03, as shown in table A2.1 of the 2000 Budget report. [117303]
§ Dawn PrimaroloPeople using personal service companies are currently able to avoid National Insurance Contributions altogether and pay tax on their income much later than an employee would pay tax through PAYE. The new legislation will ensure that affected personal service companies will pay the correct amount of tax and NICs, at the right time, rather than delaying 495W what they do pay until well after the end of the tax year. The large first year yield in 2000–01 arises because the payments of PAYE and NICs are scored as they accrue whereas the reduction in corporation tax occurs when it would have been paid, nine months after the end of the accounting period. Subsequently, the 2002–03 expected yield is lower than in 2001–02 because the full effect of the corporation tax reduction takes three years to build up.