Taxation: Avoidance — Question for Short Debate
Lord Dykes (Liberal Democrat)
My Lords, I am grateful to the usual channels for providing time for this debate and to the Treasury Minister for coming to the Front Bench at this time. I apologise to him that it is lunchtime-although a slightly late lunchtime because of the previous debate-and I welcome his visit to deal with this important and thorny matter. He is a very busy Treasury Minister and I wish that I could have saved him having to do without lunch on this occasion. I hope he can catch up with that later.
I declare an historic interest as a former member of the London Stock Exchange for many years and as a partner in a leading institutional stock broking firm, as well as a shareholder in other former City interests.
The title of the debate deliberately uses the word "avoidance" because of the grey area of avoidance leading into illegal evasion as well. The title focuses deliberately on the behaviour of business representatives and groups because that really covers almost the whole field. Most wealthy individuals, as well as companies, who seek to lower their tax liabilities tend to arrange schemes through accountants and other professional advisers. Equally, however, it would be reprehensible if non-business sector individuals were either avoiding tax unfairly or evading tax illegally through their own decisions without advisers. I have sought to raise this issue for some time because of the widespread public concern that one hears here, there and everywhere that improper tax avoidance is widespread in the UK. These matters are very sensitive right now because of the bank bonus season as well-we of course assume that our senior bank director colleagues declare and pay tax properly. Bank bonuses and whether they are justified are not within this subject. It is because rumours are so often an inadequate substitute for facts that HMG need to answer questions from Members of Parliament to allay concerns.
Of course, the concept of unfairness in the tax system is hard to grasp. The public as a whole has a strong and maybe unfair impression that ordinary taxpayers, mostly but not all subject to the deduction at source system, do not have the sophisticated advantages of professional and corporate taxpayers to soften what some people regard as the hammer blows of brutal tax demands. Add to this the widespread feeling that, unfortunately, our colleagues in the main part of the coalition seem psychologically far more interested in giving lower-income individuals rather a rough time by cutting into their social benefit payments than pursuing their-dare I say?-friends in the world of business over tax dodging, then we have an explosive political cocktail about the relentless growth of the unequal society. That is mercifully nowhere near the lamentable position in the USA, with its by-now medieval inequalities, obliging even Warren Buffett to complain yet again recently. Personally, I have a cousin in California who is a member of the Libertarian Party that regards any tax apart from defence spending and foreign affairs as positively poisonous and communistic.
In the excellent debate on financial crime legislation launched by my noble friend Lady Williams on
I intend to stay within the time limit of my speech but unfortunately the monitor Clock is incorrect and I do not know when I started. I hope it will be adjusted as quickly as possible.
Of course, I expect the Minister to say on these matters, as ever, "We do not comment on individual cases". I understand that, but the lack of accountability then speaks volumes and the public can draw their own conclusions. At least he might today try to reassure us that the colossal tax dodging that apparently occurs routinely in Britain nowadays is being dealt with. Despite some enlargement of the personnel at HMRC in recent times, it is by all accounts still struggling manfully-and womanfully, I assume-to cope with the huge backlog of dodgy schemes.
Why is it, as I hinted in that same debate in March last year, that if, for instance, you go to dinner parties in large houses in Wiltshire or Oxfordshire-I do not know about Chadlington but maybe elsewhere, too-around the table are people who appear to be in the UK a great deal but who scoff when someone says, "I pay full taxes"? Perhaps they are just boasting and making it up, but all sorts of rumours swirl around.
The absence of definitional precision helps that process of confusion and the shrugging of shoulders. Hence statistics on tax avoidance are fiercely contested and the interpretative basis is elusive. In a court of law for example, the judges presumably base their findings on what Parliament intended in any laws and regulations. That examination alone can spawn huge fees for yet more lawyers and accountants. For instance, I am assured by friends in so-called professional circles that a large number of senior broadcasters in both the public sector-that is, the BBC-and private TV and radio services routinely have corporate plans of their own that offer much bigger offsets than personal taxpayers can claim paying tax as individuals, even though these broadcasters are of course individuals. Can the Minister help here and give us any information that the Government might have to hand?
HMG have regularly referred to what they consider to be more than a £40 billion tax gap-"gap" is the word I use here. On the assumption that it would be somewhat higher because HMRC struggles to cover all cases, if everyone who should pay paid up-like ordinary mortals-that would cover a good chunk of the deficit. However, we are struggling philosophically because HMG keep banging on about corporation tax being too high. Is a 50 per cent income tax rate so excessive when it starts at such a high level? We must be careful in this country to avoid the worst horrors of the Tea Party lunacy in America that progressive taxes are worse even than communism or a proper national health service.
What is the latest development on redress policies in the many other secretive tax havens dotted around the world, partly as a result of our historical British Empire? Are the UK and other authorities locally in those areas getting to grips with the most severe abuses-and abuses in general?
Our newspapers, reflecting the reality that most-with some honourable exceptions-are owned and run by non-UK taxpaying moguls who live all over the place but not the UK, probably do not want to run too many stories about UK tax dodgers. They prefer benefit fraud, as in the Daily Mail. That is a much more attractive story for them to run. Naturally, the practical difficulties for the authorities here in dealing with these problems are huge. I sympathise entirely and once again express appreciation for what the Minister and his colleagues have been trying to do in the Treasury.
We know all too well from the world financial crisis of 2007-08 that business anywhere is truly international, global and incredibly complicated. It is hard to keep up with the worldwide legions of tax advisers-often themselves multimillionaires as well. Look how enormous the biggest UK-origin accountancy firms-the famous names-have become as worldwide entities, usually in very large towers. I remember the furore last spring when it was discovered that the Treasury had missed out on some £17 billion of tax due from companies disappearing, along with their directors, or banks and other groups not paying their taxes properly. More than half a million companies were dissolved in 2009-10, with most removed from the official register because they did not even bother to file accounts. Indeed, the Oxford University Centre for Business Taxation estimated last year that nearly a million companies failed to pay tax at all, even though presumably only a small proportion of those were not trading. Richard Murphy, a well-known director of the consultants Tax Research LLP, calculated that the total tax gap in Britain two years ago was over £120 billion. No one knows whether that is correct, but it is obviously likely to be significantly higher than the £40 billion mentioned by the Government on several occasions recently.
I hope that the Minister can reassure the House today that these estimates are ahead of the true figures. My anxiety is that, in reality, not even the Treasury, hardly known for its huge competence in guiding the ever-faltering British economy in recent decades, actually knows the truth. In replying to the debate, I hope that the Minister will also refer to the tax treatment of the overseas subsidiaries profits in UK-registered corporations which seem to be of special artificial help to the banks in recent times.
Finally, he may generously wish to guide us with his analysis of the cash-only economy-the black economy-which obviously deprives the Inland Revenue part of HMRC of yet more tax revenues, and how the authorities have managed to deal with VAT fraud and evasion. I am sure that the Government do not wish to give the impression that they are much keener on cuts in services than getting in more tax from what is apparently regarded in the City-some people repeat this again and again-as an army of tax dodgers in Britain.
Baroness Stowell of Beeston (Conservative)
I am sorry to interrupt my noble friend and that the Clock was not working properly. I thought he would find it helpful to know that he has exceeded his 10 minutes.
Lord Dykes (Liberal Democrat)
Because of the Clock, I conclude by referring to Danny Alexander, Chief Secretary to the Treasury, who said on Tuesday that tax dodgers have nowhere to hide and that we will get them. I would be grateful if the Minister commented on that comment from the other place.
Lord Phillips of Sudbury (Liberal Democrat)
My Lords, it is perhaps a measure of how the subject of this debate is viewed that only around 10 Members of the House are present, apart from the speakers. I fear that the whole issue of tax avoidance or evasion-I do not see the difference-is of the most fundamental importance to this country at this time. Some of the greatest traditions of our country revolve around integrity and equality before the law. In the legal profession that I started in, in 1957, there was no tax evasion or avoidance industry. It is a creature of the last 30 or 40 years. Indeed, the lengths of tax avoidance would have been to tell your farmer client that he had better give away some land at least seven years before he died, so that he did not have to pay inheritance tax. In the 1970s, we had the growth of what one would call highly artificial tax schemes. Some may remember the name Rossminster. That was the start of what has become an international industry.
There are tens of thousands of lawyers and accountants who do nothing but avoid tax for their highly paying clients. While the vast majority of British accountants and lawyers try to play fair and will not stretch the rules beyond reasonability, they are under pressure because an increasing number of professionals will stretch the law beyond reasonability and will take artifice to byzantine and ludicrous lengths. We had a little hint of that when Mr Diamond gave evidence to the Select Committee and purported not to know how many subsidiary companies Barclays used in avoiding tax in this country. I believe that it paid only 1 per cent of its gains in tax in the UK. Someone was able to inform the committee afterwards that there were literally hundreds and hundreds of subsidiaries spread across the various tax havens, which enabled that state of affairs to come about.
What sort of society is it in which the CEO of Barclays this year, last year or the year before can earn £22 million with his bonus and earn more in a day than a state-registered nurse on an acute ward in one of our hospitals earns in a year? That is so contrary to any concept of a fair or decent society that I put it to the House that the issues that we are talking about run to the very roots of our society, its culture and nature.
When I started again in the law, solicitors and accountants were what were called pillars of the community. For a complex of reasons, I am afraid that that is no longer the case. There is a quite staggering disconnect between those who work in the City of London and civic society at large. Very few indeed contribute anything to civic society, except their taxes. I believe with a passion that we need to have a renaissance of citizenship in this country, a restoration of a sense of community, national and local, because as a lawyer I have to tell the House that you cannot legislate for virtue. We have already gone a long way down the road of regulation in trying to stop loopholes, as they are called. The statute book has got more and more complicated and, with a great irony, has removed even further from the minds of professionals in this world the sense that they should play fair and have some sort of civic justice in the work they do.
The limited company, too, has been a great engine of demoralisation, to use that word in its literal sense. How few board members these days feel able to say, "I'm sorry, I think that's wrong-I don't think this company should be doing that."? Indeed, a friend of mine whom noble Lords would know, who is a chairman of public companies, made this point around the board table not long ago in relation to some new tax scheme thought up by the company's advisers. The board concurred, but the next day he had a visit from the company secretary, who said, "You know, you acted illegally yesterday in rejecting out of hand the scheme that was put up". That is but one small instance of a demoralised corporate world.
Where amorality rules, it is not able to withstand for long the creep towards immorality when the gains are big enough. I shall give an example, although it is probably unfair to KPMG, because all its competitors have their own dark secrets. In 2006-07, KPMG was exposed in the US as having been party to fraudulent tax schemes that enabled its clients fraudulently to avoid paying $2.5 billion of US tax. In a plea bargain, the partners managed to avoid being individually criminally prosecuted, as in my view they should have been, by agreeing to pay penalties of $450 million. This is a great firm reduced to ignominy because there is no longer any culture of integrity sufficiently strong to withstand the huge pressures and temptations of the tax avoidance industry. And of course the voice that says, "If we don't do it, our competitors will", is a powerful one.
What can we do about it? I am convinced that we have to do something about it, because I am convinced that we are destroying the very seedbed of our proud civic traditions in this country. To whom do ordinary young people look as good examples these days? Unless we do something about this, we will find more of the statistics revealed yesterday by the University of Essex, which did some long-term research on attitudes of the public to honesty. The university has now established a centre for the study of integrity on a longitudinal, cross-departmental basis. That research revealed that the 20 to 25 age group has a radically different view of honesty from the 60 to 65-year age group. The graph is a straight stairway. The evidence is complicated and difficult to interpret, but it is that the standards of probity and attitudes to honesty in our great country are in decline. I am sure that everyone here today still feels proud, because we still have standards of probity in public life that are the envy of most countries. However, when standards are in head-long decline, it behoves us in this place most of all to recognise it and do something about it.
Of course, the great stain on our escutcheon was the extensive expenses fraud in both Houses. We suffer from that-and the reckoning of the evidence from the University of Essex is that 91 per cent of the public feels that the politicians in this country are fairly corrupt. They do not trust us-and trust and fairness are the pillars of a good society. Without either of them you cannot have a good society. I am sure that all of us feel passionate about trying to bring about a good society as far as we can.
I end by restating my conviction that there is a strict limit to what we in Parliament can do. Far too much of the time, the citizens of this land look to us to put things right, and far too much of the time we pretend that we can. In this broad matter of honesty in taxation, it is down to individual people and businessmen to assert their moral autonomy for the public good.
Lord Eatwell (Labour)
My Lords, the issues raised by the noble Lords, Lord Dykes and Lord Phillips, have recently been the subject of two important reports. First, the report of the Public Accounts Committee into tax disputes, published on
Everyone in this country who is settling their tax assessment this month, knowing that they will incur a fine and interest charges if they do not pay up on
"the Department did not even take the most basic step of making its own note of meetings with the company concerned, relying instead on the record kept by the company".
To compound this record of complacency and connivance, the department failed to be open with the PAC investigation and was,
"less than clear and consistent in the evidence",
It is important to remember that HMRC is, quite rightly, a non-ministerial department, thereby removing Ministers from any suspicion of involvement in individual taxpayers' affairs, but this scandal goes beyond matters that can be remedied at arm's length by more effective management and the appointment of extra revenue commissioners. It strikes at the very heart of the fair and impartial management of the tax system. It reveals systemic failures that have resulted in unfair and partial treatment verging on favouritism, and it demands the exercise of ministerial responsibility, for it undermines public confidence in the probity of government and the integrity of the Revenue.
If the failings exposed by the PAC were an isolated set of events-an aberration-the measures taken so far by HMRC to put its house in order just might be regarded as sufficient. Regrettably, this is not the case. As we have heard from the noble Lords opposite, it is a widely held view that tax avoidance is rife in this country, and that wealthy individuals and large companies that can afford sophisticated tax advisers can avoid attacks by abusive means.
The term "abusive means" has been defined by Mr Graham Aaronson QC as,
"contrived and artificial schemes which are widely regarded as an intolerable attack on the integrity of the UK's tax regime".
This quotation is taken from a report entitled A Study to Consider whether a General Anti-Avoidance Rule should be Introduced into the UK Tax System, published in November last year, which was authored by Mr Aaronson and commissioned, to give them due credit, by Her Majesty's Government. I applaud the initiative. Mr Aaronson concludes that a general anti-avoidance rule should be introduced, and proposes practical means by which this might be done. In his report, he argues that certainty in the tax system makes an important positive contribution to the economic and business environment. The presence of tax loopholes, and their exploitation by the unscrupulous, undermines that certainty. Moreover, competitive pressure forces firms to adopt more and more elaborate tax avoidance measures.
Competitive advantage can be gained by companies that go down the tax-abusive route, and hence firms that attempt to take a high moral stand, as the noble Lord, Lord Phillips, points out, are placed at a competitive disadvantage and may be eliminated from the marketplace. All must join the race to the bottom. Tax avoidance by businesses therefore undermines certainty, forces firms to adopt the tax-avoidance policies of the lowest common denominator, undermines any perception of fairness in the tax system and imposes a dead-weight loss on the economy by spawning a socially useless tax avoidance industry. It is damaging not just to the Revenue, but to the performance of the economy as a whole.
The source of this pernicious burden on our economy, the foundation of the tax avoidance industry, is the complexity of the tax system. It is complexity that by its very nature creates the exceptions and loopholes that can be legally exploited by the enthusiastic, well resourced tax avoider. If we are to tackle the disease rather than the symptoms, complexity should be the target. An important reason for the complexity of the tax system is that Governments attempt to manipulate behaviour via tax allowances and reliefs to incentivise people to behave in a particular way-to invest in new businesses or to undertake more R&D, or to recycle waste, or whatever. What is remarkable is that years of academic study have demonstrated that very few of these incentives actually work. Tax allowances to stimulate investment, for example, do not tend to result in more investment. Instead, they are a subsidy to investment that would have taken place anyway.
Another important source of complexity is a government belief that it is appropriate to differentiate between revenues from different sources, so that benefit deemed to derive from capital gains, or, more scandalously, from carried interest, is taxed differently from benefit derived from income. The treatment of interest on debt as a cost, and hence being tax deductible, is a major factor distorting the funding of business in this country. All this is a rich source of tax avoidance. Then of course there are the tax benefits handed out to specific social groups with the most powerful lobbying voices-the non-doms come immediately to mind.
Whether it derives from good intentions, perceived policy objectives, or mere cowardice and/or patronage in the face of the powerful and well funded, complexity is the fundamental source of avoidance. Without tackling complexity, the avoidance industry will never be significantly reduced. I therefore applaud the establishment by the Government of the Office of Tax Simplification and look forward, in hope rather than expectation, to its efforts bearing fruit. In the mean time, while we wait for the simplified promised land, Mr Aaronson concludes that all current approaches to curb tax avoidance,
"are not capable of dealing with some of the most egregious tax avoidance schemes".
He might have added, if he had had the PAC report before him, that all attempts to limit tax avoidance are undermined if there exists the cosy relationship between the HMRC and big business identified in the PAC report.
With the PAC report and Mr Aaronson's report before him, the Minister must address a number of questions. First, when did Ministers first know of the matters identified in the PAC report? Were they fully informed, or have they made further investigations? What have their investigations, if any, revealed about further abuse and, if so, what sort of abuses? What action do the Government intend to take to correct the systemic deficiencies in the HMRC? Is it not time for a full investigation into the practices and substance of the taxation of large companies, in order to re-establish public confidence in the probity of government and of the Revenue? Secondly, do the Government accept the conclusions of Mr Aaronson's report? When do they intend to introduce a general anti-avoidance rule, with the institutional support outlined by Mr Aaronson? Thirdly, when can we expect a report from the Office of Tax Simplification that deals specifically with business taxation and tax avoidance?
Confidence in the tax system is, as noble Lords opposite have said, fundamental to our democracy. If confidence in the fairness and probity of the state is lost, effective revenue raising is undermined-colourful examples, perhaps from the Mediterranean, can be imagined. The issues identified in the Public Accounts Committee report and in Mr Aaronson's report demand an urgent response. I hope we will hear from the Minister today the concrete steps that the Government intend to take to curb abusive behaviour towards the tax system. If practical steps are not forthcoming, the Government will have some explaining to do to this House and to the British people.
Lord Phillips of Sudbury (Liberal Democrat)
The noble Lord raised some extremely pertinent points about HMRC, but does he agree that the Government reducing the staffing at HMRC over the next few years by 12,000 is scarcely likely to increase the effectiveness of tax collection?
Lord Sassoon (Commercial Secretary, HM Treasury; Conservative)
My Lords, I am grateful to my noble friend Lord Dykes for giving us an opportunity to discuss the important issue of tax avoidance and to remind the House of what the Government are doing to clamp down on it. However, we should put the whole subject into perspective. It is an important topic. There have been few speakers, but a considerable degree of heat has been thrown at the topic that may occasionally have obscured the light.
We must remember what we need to achieve in this area, particularly in the current economic situation, when we are faced with reducing the largest peacetime deficit on record. It is of course more important than ever and fair that everyone, whether businesses or individuals, pays their fair share of tax, but we have to remember that we must keep this country competitive. We are competing in a global economy, so we have to have a tax regime that is competitive for businesses, is fair for individuals and incentivises individuals to get off benefits and into work. Yes, the tax-avoidance question is critical, but we have to remember the wider context in which it operates.
A fair tax system means closing the tax gap and ensuring, as I have said, that businesses and individuals pay in full what they owe. My noble friend Lord Dykes asked questions about the size of the tax gap and whether we really understand its make-up. The figures for 2009-10 are that the tax gap was estimated at 7.9 per cent of liabilities, £35 billion in cash terms, which means that HMRC collects over 90 per cent of all the tax that is theoretically due. We have to do better. HMRC has to do better and it is working on that-I shall come on to that shortly-but, if someone heard this debate in isolation, they might think that the performance of HMRC was much worse. It collects over 90 per cent of all the tax that is theoretically due, or £468.9 billion in revenue in 2010-11. We should also remind ourselves that the latest figures show an overall decrease in the overall net tax gap of £7 billion from 2008-09 to 2009-10.
We should therefore be cautious about the methodology, but the 8 per cent tax gap in the UK compares well with other economies. For example, the USA's tax gap is 14 per cent and, to take a country in Europe that is widely regarded as a model of fiscal rectitude, in Sweden the tax gap is 10 per cent.
The Government's approach to tackling avoidance builds on HMRC's anti-avoidance strategy. There are three core elements to that approach: prevention, detection and counteraction, with a clear focus on preventing avoidance before it can occur. I say "avoidance"; I do not of course share my noble friend Lord Phillips of Sudbury's contention. I know that it is nothing new that he feels strongly that avoidance and evasion are the same thing.
Over the past 20 months we have demonstrated real progress. In answer to the challenge from the noble Lord, Lord Eatwell, about the concrete actions that we are taking, in the most recent Finance Act we closed down a range of avoidance schemes to bring in yield of around £1 billion a year over the course of this Parliament. Only this month, we acted quickly to stop a particularly significant avoidance scheme aimed at artificially exploiting an income tax relief. That scheme posed a significant risk to the Exchequer, and our quick action ensured that this risk did not materialise. That is the sort of concrete action that we will take.
In answer to the questions about whether HMRC has the capacity to deal with the threat of avoidance, the Government have underlined our commitment to tackling avoidance with the reinvestment in HMRC, which I am sure noble Lords are aware of, of over £900 million, which should bring in around £7 billion each year by 2014-15 in additional tax-again, concrete additional targeted action.
Lord Phillips of Sudbury (Liberal Democrat)
Can my noble friend then reassure the House on the figure about which I asked earlier and say that the reduction in staffing of 12,000 will not affect the front-line effort to reduce tax avoidance/evasion?
Lord Sassoon (Commercial Secretary, HM Treasury; Conservative)
My Lords, as I am sure my noble friend would recognise, all government departments are having to tighten their belts; otherwise, the deficit is not going to be tackled. I hope to reassure him by explaining where HMRC is focusing its efforts. The recruitment of over 1,200 staff in new posts to tackle non-compliance is significantly upping HMRC's efforts in this area and will bring in significant additional revenue in each tax year, so the answer to his question is yes.
The customer relationship model that HMRC uses has considerably improved its ability to identify risk and to handle these issues. The report by the National Audit Office on HMRC's 2010-11 accounts, which underlay one of the reports referred to by the noble Lord, Lord Eatwell, noted that HMRC's high-risk corporate programme has brought in a yield of over £9 billion and that it contributed to reduced avoidance activity by major companies. The investment is there. On another point made by my noble friend Lord Dykes, we do not forget the cash economy in those efforts.
I am grateful to the noble Lord, Lord Eatwell, for drawing attention to the question of the general anti-avoidance rule, the GAAR. We are exploring that option to see whether such a rule could help to deter and counter tax avoidance in a fair way. Attention has been drawn to the work of Graham Aaronson and his colleagues and their report. We received the report in November last year. We will be considering it and are actively discussing its implications with businesses and tax professionals. We will respond to the report at the Budget and set out our plans if appropriate. We have said clearly that we would not introduce a GAAR without a further formal round of public consultation, so that is very much work in progress.
I am also grateful to the noble Lord, Lord Eatwell, for applauding the introduction and the work of the Office of Tax Simplification. The complexity of the tax system has been much remarked on, and I can echo many of the remarks made by noble Lords on that. The OTS has started its work and published recommendations on tax relief, avoidance legislation and IR35, as well as an interim report on small business tax. More is coming down the pipeline and this ongoing work will be an important part of what we all want to see: a simpler tax system that is easier for individuals to comply with. I may disagree with the emphasis of my noble friend Lord Phillips of Sudbury on some things, but I certainly agree that this is fundamentally about individuals doing what they are required by the law to do.
Another critical component of preventing avoidance is the way in which HMRC engages with the largest taxpayers proactively to identify and tackle avoidance. We do not have the time to go into the detail of this but, in response to some of the somewhat one-sided interpretation and selective quoting of the recent Public Accounts Committee report, I draw the attention of the House to HMRC's detailed rebuttal on many factual points in the conclusion of that report. In brief, to be clear, this effort with large businesses is not in any way HMRC being soft on large business or on those with complex tax affairs. HMRC treats all taxpayers even-handedly and does not allow them to settle for anything less than the full amount due. It is through its engaged and intelligent approach to tax avoidance that the additional revenue to which I have already referred is coming in.
Lord Eatwell (Labour)
The noble Lord referred to erroneous statements in the PAC report. Did they include the observation that senior HMRC officials had had lunch and dinner with the companies that then had a reduced tax burden?
Lord Sassoon (Commercial Secretary, HM Treasury; Conservative)
My Lords, the substance of the issues to which HMRC takes exception is to do with the size of unresolved tax bills and some of the details of cases in which errors were found that HMRC disputes. That is the substance, rather than the question of who met whom with what refreshments laid on. We should stick to the substance.
Other noble Lords have been scrupulous in keeping to their time. I am conscious that, with the interventions, I risk going over my time, so I will press on. I want to answer just one more question, raised by my noble friend Lord Dykes, about the tax treatment of overseas companies. I just confirm that we are reforming the controlled foreign company rules very much to protect against the artificial diversion of profits to low-tax jurisdictions, just as our general reforms are being made to make the UK a good place for global corporates to have their headquarters. Having said that this is a matter for individuals, I will not comment on the affairs of any individuals.
In conclusion, I have very briefly explained our strategy for tackling tax avoidance to ensure that everyone pays their fair share. This is an important topic and I am glad that we have had this debate. The Government are taking real, decisive, concrete action to close the tax gap. We are making good progress, but there is much more to do. We will ensure that every sector of society pulls in the same direction to tackle the deficit and the woeful economic legacy left to us by our predecessors.