The next regulations are the Welsh Tax Acts (Miscellaneous Amendments) (EU Exit) Regulations 2019. 

And now it's your turn, Trefnydd—Rebecca Evans. 

Motion NDM7013 Rebecca Evans

To propose that the National Assembly for Wales; in accordance with Standing Order 27.5:

1. Approves that the draft The Welsh Tax Acts (Miscellaneous Amendments) (EU Exit) Regulations 2019 is made in accordance with the draft laid in the Table Office on 05 March 2019.

Motion moved.

Diolch, Llywydd. I move the Welsh Tax Acts (Miscellaneous Amendments) (EU Exit) Regulations 2019, which make a number of changes to the Welsh tax Acts. In the main, these changes are technical in nature and are made to ensure the operation of legislation in the event of the UK leaving the EU without a deal.

These regulations consist of six parts. Part 1 sets out the commencement dates for the various regulations. Except for part 2, which will come into force the day after the regulations are made, the regulations will come into force on exit day, whether that be 11.00 p.m. on 29 March 2019, or the end of any transitional or article 50 extension periods.

Part 2 updates a reference to EU regulations relating to the basic payment scheme for farmers. This change is necessary, Brexit or not, which is why this regulation comes into force on the day after these regulations are made.

Part 3 replaces the definition of a charity for the purposes of charities' relief in the land transaction tax legislation. Currently, the LTT definition depends upon a cross-reference to UK tax legislation. The new Welsh charity definition will provide that relief will only be available to UK registered charities and not, as is the case currently, to those that meet the relevant conditions from EU and European Economic Area sates as well.

Part 4 has a similar effect in relation to co-ownership authorised contractual schemes, known as CoACS, when buying land in Wales. Currently, UK, EU and EEA CoACS are treated, for the purposes of LTT, as though they are companies. This simplifies their tax treatment and results in them being treated in a similar manner to other investment vehicles, such as unit trusts. The new rules will provide that this tax treatment will only be available to schemes authorised under section 261D of the Financial Services and Markets Act 2000 and not, as is the case currently, to those that meet the relevant conditions from the EU and EEA states. 

Part 5 makes three minor changes. Firstly, to remove the restriction on a Member of the European Parliament from being appointed as a non-executive member of the Welsh Revenue Authority. The second and third changes are needed to ensure that two provisions operate in a 'no deal' scenario based on what will become retained EU law and not ongoing and evolving EU law.

Part 6 makes some consequential changes either to reflect changes made by these regulations in other areas of the Welsh tax Acts or to ensure that our legislation is as clear as possible.

I ask Members for their support for these regulations this afternoon.

Dai Lloyd to speak on behalf of the Constitutional Legislative Affairs Committee.

Diolch yn fawr, Llywydd. These are the Welsh Tax Acts (Miscellaneous Amendments) (EU Exit) Regulations 2019. We considered these regulations at the Constitutional and Legislative Affairs Committee meeting on 18 March. We reported two technical points to the Assembly under Standing Order 21.2(ii).

The first point is complex and concerns the unusual way of using the powers given to the Welsh Ministers under the Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017. The regulations say that an EU or an EEA co-ownership authorised contractual scheme will no longer receive the same preferential treatment as a UK co-ownership authorised contractual scheme. Now, as everybody knows, a co-ownership authorised contractual scheme is a type of tax-transparent fund structure. But since the 2017 Act gives EU and EEA schemes that same preferential treatment, it seems unlikely the Assembly ever intended that the regulation-making powers in the 2017 Act would be used to reverse an important part of the 2017 Act. However, the changes are needed as a result of exiting the EU. The European Union (Withdrawal) Act 2018 prohibits this kind of change, so the only option available to the Welsh Ministers was to use powers under the 2017 Act. This is therefore very complex.

In its response, the Welsh Government acknowledges that the circumstances giving rise to the use of the powers, namely the preparations for the UK’s exit from the EU in a 'no deal' scenario, are exceptional and unusual. The Welsh Government considers that the use of the powers is appropriate and necessary. 

Our second point concerns a problem with the definition of 'collective investment scheme' in section 36(12) of the 2017 Act, which will become redundant as a result of the amendments made by these regulations. The Welsh Government accepts this point and while the legal effect of this definition is now redundant, it will repeal this definition in the next appropriate piece of legislation. Diolch yn fawr, Llywydd.

The Minister to respond.

Thank you, Llywydd. The Member raises two particular points, which were the reporting points of the Constitutional and Legislative Affairs Committee, the first being the point about unusual or unexpected use of powers by Welsh Ministers. Fundamentally, the powers conferred on the Welsh Ministers by section 36(8) are to deem that a scheme of the descriptions specified in those regulations is not to be eligible for the treatment ordinarily given to those schemes by that section. Consequently, regulations made under this power will always have the effect of reversing the proposition set out in the primary legislation in so far as the scheme meets the description in those regulations. The circumstances giving rise to the use of the powers—so, namely the preparation for the UK's exit from the EU in a 'no deal' scenario—are exceptional and unusual. Given the circumstances, the Government considers the use of the powers to be appropriate and necessary.

And on the second point regarding the redundant definition of 'collective investment scheme', we're very grateful to the committee for identifying this and, as Dai Lloyd has said, the Government will repeal this definition at the next appropriate opportunity.

The proposal is to agree the motion. Does any Member object? No. Therefore, the motion is agreed.

Motion agreed in accordance with Standing Order 12.36.