Written questions by Morello.

What the projected annual loss of tax revenue is from non-VAT registered companies with turnover above the VAT threshold.

HM Revenue and Customs (HMRC) estimates the size of the tax gap, which is the difference between the amount of tax that should, in theory, be paid to HMRC, and what is actually paid. The tax gap statistics and details of the estimate methodologies are published annually and are available at: Measuring tax gaps 2025 edition: tax gap estimates for 2023 to 2024 - GOV.UK. The latest estimate of the tax gap for VAT is 5.0% of theoretical VAT liability, or £8.9 billion in absolute terms, for tax year 2023 to 2024. This figure implicitly captures, alongside other sources of non-compliance, companies failing to register for VAT, however a separate breakdown is not separately published due to the methodological approach used to calculate it and the associated uncertainties. HMRC does not make projections of the future loss of tax revenue due to companies failing to register for VAT. ‘Measuring tax gaps 2026 edition: tax gaps estimates for 2024 to 2025’ is scheduled for June 2026.

Whether her Department plans to review duty relief schemes to support the growth of British wine production.

The wine industry makes a vital contribution to our economy and society. Draught Relief allows products served on draught to benefit from a lower rate of alcohol duty, providing vital support to producers, pubs and other venues. Small Producer Relief supports smaller firms and new entrants by providing a reduced duty rate for those who make 4,500 hectolitres or less of alcohol per year. While wine producers can benefit from these reliefs, both are limited to products below 8.5 per cent alcohol by volume (ABV), in line with the principle underpinning the reformed alcohol duty system that stronger alcoholic drinks should pay more duty.The Chancellor makes decisions on tax policy at fiscal events, and the Government welcomes representations from the wine sector in advance of the Budget.

What the estimated total turnover of non-VAT registered companies is.

Information on companies that are not VAT registered is not centrally collated and could be provided only at disproportionate cost.

How many non-VAT registered companies there are in the UK.

Information on companies that are not VAT registered is not centrally collated and could be provided only at disproportionate cost.

What assessment she has made of the potential impact of reducing wine duty to 14 per cent on British wine producers.

The wine industry makes a vital contribution to our economy and society. We also know the sector has found economic conditions challenging over the past few years, in part due to the pandemic, energy costs, and the cost-of-living crisis. As you know, a cut, or even a freeze, to alcohol duty represents a cost to the Exchequer. The baseline assumption is that alcohol duty will be increased annually, so that it does not fall in real terms. As with all taxes, the Government welcomes representations from stakeholders to inform policy development.

What recent assessment her Department has made of the potential impact of (a) business rates and (b) VAT on the financial sustainability of hotels in (i) rural areas and (ii) West Dorset constituency.

The Government recognises the significant contribution made by hospitality and tourism businesses, including those in rural areas, to economic growth and social life in the UK. To deliver our manifesto pledge, from 2026/27, we intend to introduce permanently lower tax rates for retail, hospitality, and leisure (RHL) properties, including hotels, with rateable values below £500,000. This permanent tax cut will ensure that they benefit from much-needed certainty and support. Ahead of these new multipliers being introduced, the Government recognises that businesses will need support in 2025/26. As such, we prevented the current RHL relief from ending in April 2025, extending it for one year at 40 per cent up to a cash cap of £110,000 per business, and we froze the small business multiplier. When the new, permanently lower tax rates are set at Budget 2025, the Treasury intends to publish analysis of the effects of the new multiplier arrangements. VAT is a broad-based tax on consumption, and the 20 per cent standard rate applies to most goods and services. The UK’s VAT rate of 20 per cent is close to the OECD average of 19.3 per cent. The UK has a higher VAT registration threshold than any EU country and the joint highest in the OECD, at £90,000. This keeps the majority of businesses out of the VAT regime altogether.

How many non-VAT registered companies there are in West Dorset constituency.

Information on companies that are not VAT registered is not centrally collated and could be provided only at disproportionate cost.

What the average administrative cost is of collecting VAT from a VAT-registered company.

HMRC calculate annually the cost to collect £1 of VAT. In 2024-25, it cost 0.58 pence, i.e. less than one penny, to collect £1 of VAT on average. This ratio has been broadly stable over recent years. Cost of Collection - VAT - 5 year Trend from 2020-2021 to 2024-2025 2020-20212021-20222022-20232023-20242024-2025pencepencepencepencepenceVAT0.630.520.540.580.58

Whether HMRC defines SSIPs as pension assets for the purposes of (a) means-tested benefits and (b) financial assessments.

The treatment of Self-Invested Personal Pensions (SIPPs) for the purposes of means-tested benefits and financial assessments does not fall within HMRC’s remit. HMRC’s role is to define and regulate pension schemes for tax purposes, including SIPPs, which may be registered pension schemes under the Finance Act 2004. Decisions regarding the treatment of pension assets in means-tested benefits are a matter for the Department for Work and Pensions (DWP), while financial assessments for adult social care are administered by local authorities under guidance from the Department of Health and Social Care (DHSC). HMRC does not define SIPPs as assets for the purposes of benefit entitlement or financial assessments. Any determination of how such pensions are treated in those contexts should be sought from the relevant departments.

If she will make an assessment of the potential impact of charging VAT on carbon offset donations on levels of public engagement with climate action.

Payments that are freely given without the expectation of receiving something in return are not in the scope of VAT. This is a fundamental principle of how VAT operates. Donations made to carbon projects are outside the scope of VAT. This means that VAT should not be charged on carbon offset donations. There are no plans to change this position.

If she will make it her policy to exempt donations to verified carbon offsetting projects from VAT.

Payments that are made voluntarily, without expectation of receiving goods or services in return, fall outside the scope of VAT. This is a core principle of the VAT system. As such, donations to verified carbon offsetting projects are not subject to VAT, and VAT should not be charged on these donations.

What recent discussions she has had with (a) HMRC and (b) stakeholders on the VAT treatment of voluntary payments made to international carbon offsetting projects.

HMRC engaged with stakeholders prior to clarifying the policy on the VAT treatment of voluntary carbon credits in 2024. As of 1 September 2024, payments made to non-statutory carbon offsetting projects for the purchase of voluntary carbon credits are in the scope of VAT where the place of supply is the UK. Payments made to international carbon offsetting projects are outside the scope of UK VAT.

If she will make an assessment of the potential merits of enabling people to Gift Aid donations made to certified carbon offsetting projects.

The Government recognises the vital role played by the charity sector and the generosity of the British public. That is why we supported charitable giving with over £1.7billion in Gift Aid in tax year 2025. Donations to UK registered charities recognised by HMRC, that are involved in or run certified carbon credit projects, are already allowable for Gift Aid, an example being ‘The Woodland Trust’. The UK Government is a strong supporter of the responsible voluntary use of high-integrity carbon and nature credits as part of climate and nature strategies. This commitment is reflected in the launch of the Principles for Voluntary Carbon and Nature Market Integrity and the government consultation which closed in July on their operationalisation, which will further the UK's ambition to become the green finance capital of the world.

Whether she is taking steps to review the oversight mechanisms of the Financial Conduct Authority.

The government and Parliament exercise oversight over the Financial Conduct Authority (FCA) in a number of ways, including through the government’s remit letters, which set out elements of the government’s economic policy to which the FCA must have regard, and parliamentary scrutiny of the FCA’s Annual Reports. Senior representatives of the FCA also regularly give evidence to parliamentary committees, where the FCA’s performance and operational effectiveness is scrutinised. The government is currently consulting on a number of proposed targeted changes to the regulatory environment for financial services, designed to support the government’s overall ambition to ensure that regulation supports growth, is targeted and proportionate, is transparent and predictable, and adapts to keep pace with innovation.The consultation includes a proposal to require the FCA and the Prudential Regulation Authority to set out long-term strategies for how they will advance their objectives, including their secondary objectives to facilitate growth and international competitiveness. This will ensure that stakeholders, including regulated firms in the sector, are able to fully understand the UK’s strategy towards the sector. This will also ensure that government and parliament are able to effectively hold the regulators to account for how they translate their objectives into different priorities.As part of the consultation, the government also confirmed it will review the regulators’ overall reporting structure to focus it on the regulators’ core functions and objectives, minimising the number of documents stakeholders and Parliament must engage with for effective scrutiny.

What discussions she has had with the Financial Conduct Authority on the adequacy of its money laundering risk management policies.

The government meets regularly with the Financial Conduct Authority (FCA) to discuss a range of topics. The FCA is required under the Money Laundering Regulations (MLRs) to assess the risks of money laundering for the businesses it supervises for compliance with the MLRs; to maintain risk profiles for these businesses; and to take a risk-based approach to supervision. The Treasury collects a range of information from the FCA to evaluate its approach to managing money laundering risk and publishes it as part of the annual report on anti-money laundering and counter-terrorist financing supervision. The latest annual report is available here: https://www.gov.uk/government/publications/anti-money-laundering-and-countering-the-financing-of-terrorism-supervision-report-2023-24

Whether she has made an assessment of the potential impact of anti-money laundering compliance requirements on the financial viability of small and medium-sized law firms.

I refer the hon. Member to the answer to UIN 67269.

Whether she plans to review (a) anti-money laundering laws and (b) guidance applicable to property lawyers.

Under the Money Laundering Regulations, estate agents and legal professionals must apply customer due diligence measures to mitigate the risk that property purchases are used to launder the proceeds of crime. These measures include checking and verifying the identity of buyers and sellers and assessing the purpose and intended nature of the transaction. The Regulations enable a proportionate, risk-based approach to customer due diligence, meaning conveyancers and others should actively assess and respond to the specific risks in each transaction. The Legal Sector Affinity Group (LSAG) guidance provides detailed advice to legal professionals on how to comply proportionately with these requirements in property transactions. HM Treasury has regular discussions with representatives of regulated sectors, including conveyancers, to ensure the Regulations remain proportionate and effective.

What assessment she has made of the consistency of enforcement by the Office for Professional Body Anti-Money Laundering Supervision across legal sector regulators.

OPBAS oversees 22 Professional Body Supervisors (PBSs) in the legal and accountancy sectors, to improve their Anti-Money Laundering/Counter-Terrorist Financing (AML/CTF) supervision. Its powers include obtaining information from PBSs, appointing skilled persons to improve supervisory work, and recommending that HM Treasury remove a PBS as an AML/CTF supervisor. OPBAS produces annual reports on PBS performance against the expectations set out in its Sourcebook. These show that OPBAS has delivered substantial improvements since 2018; however some weaknesses remain and HM Treasury has consulted on further options for reform.

Whether she has had recent discussions with property lawyers on the potential impact of anti-money laundering regulations on the homebuying process.

Under the Money Laundering Regulations, estate agents and legal professionals must apply customer due diligence measures to mitigate the risk that property purchases are used to launder the proceeds of crime. These measures include checking and verifying the identity of buyers and sellers and assessing the purpose and intended nature of the transaction. The Regulations enable a proportionate, risk-based approach to customer due diligence, meaning conveyancers and others should actively assess and respond to the specific risks in each transaction. The Legal Sector Affinity Group (LSAG) guidance provides detailed advice to legal professionals on how to comply proportionately with these requirements in property transactions. HM Treasury has regular discussions with representatives of regulated sectors, including conveyancers, to ensure the Regulations remain proportionate and effective.

Whether she has made an assessment of the potential impact of anti-money laundering regulations on transaction times in property conveyancing.

Under the Money Laundering Regulations, estate agents and legal professionals must apply customer due diligence measures to mitigate the risk that property purchases are used to launder the proceeds of crime. These measures include checking and verifying the identity of buyers and sellers and assessing the purpose and intended nature of the transaction. The Regulations enable a proportionate, risk-based approach to customer due diligence, meaning conveyancers and others should actively assess and respond to the specific risks in each transaction. The Legal Sector Affinity Group (LSAG) guidance provides detailed advice to legal professionals on how to comply proportionately with these requirements in property transactions. HM Treasury has regular discussions with representatives of regulated sectors, including conveyancers, to ensure the Regulations remain proportionate and effective.