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Clause 1 — Main rate of corporation tax for financial year 2011

Part of Finance Bill – in the House of Commons at 6:15 pm on 12th July 2010.

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Photo of David Gauke David Gauke The Exchequer Secretary 6:15 pm, 12th July 2010

I am grateful to my right hon. Friend, who brings me to my next point.

The Government see the distinction between tax avoidance and tax planning, but those lines can be blurred, and sometimes use of the terminology is not as accurate as it might be. For example, I quote the "Missing Billions" report, produced for the TUC, which, after setting out a series of numbers leading towards the estimate for corporation tax avoidance, states:

"Much may be due to legitimate tax planning, but by no means all is. Some, undoubtedly, is due to tax avoidance."

That seems to me to suggest a slight blurring of the lines. Again, I am sure that I will be corrected in Mr Murphy's blog if I am wrong, but there does appear to be some confusion.

I am not suggesting that tax avoidance and tax evasion do not matter. The £40 billion figure is significant. However, it is also true that we cannot pretend that if we just address this problem, the deficit will go away. Although it is always tempting for a new Minister in a new Government to attack everything that happened before, I must point out-not purely out of fondness for my predecessor, the right hon. Member for East Ham-that, in international terms, £40 billion is not too bad as a percentage of tax revenue raised.

HMRC does not do particularly badly. Indeed, it tends to lead the field in this respect. Nor has it deteriorated during a period in which it has incurred substantial job losses, as a number of Members have pointed out. I believe that it employed 97,000 people in 2005, and the most recent figure is 69,000. It is a question of deploying resources as effectively and efficiently as possible.

None the less, to the extent that it is possible to go further in reducing evasion and avoidance, the Government are keen to do so, and I have set out some of the ways in which we intend to do so. I can tell the hon. Member for Hayes and Harlington that we already assess the amount of tax lost through avoidance and evasion, and that we are committed to reduce those losses as much as possible. We will also continue to publish the tax gap figures as frequently as possible, to provide a focus for HMRC and to ensure that our debate is well informed.

I hope that what I have said gives some reassurance to the hon. Member for Hayes and Harlington. Let me also remind the shadow Minister that HMRC introduced a banking code of practice in 2009, and HMRC's annual report will provide anonymised statistics on the number of banks that have adopted it. We believe that the code encourages banks not to enter into, or be party to, avoidance arrangements, but we will of course continue to monitor and review its operation.

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