Finance Bill

Part of the debate – in the House of Commons at 5:59 pm on 12th September 2017.

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Photo of Charlie Elphicke Charlie Elphicke Conservative, Dover 5:59 pm, 12th September 2017

At least the third go was the best of the three, but we have covered that matter and, as you rightly and gently chide me, Mr Speaker, we need to move on to the contents of the Bill.

I will therefore move on to discuss non-doms and the background to the relevant clause. Some years ago, a pledge was made by a former Prime Minister, Tony Blair, to take action on the issue of non-doms, but it was one of these things that ended up in constant reviews. Every year there was going to be review and action was going to be taken, but every year no action whatsoever was taken against this ancient, 200-year-old tax loophole. That was because of the prawn cocktail circuit and the Labour Government wanting to snuggle up to their friends in the City and in big business, rather than securing the tax system for ordinary folk. We ended up with a situation in which the person cleaning an office could be paying more in tax than their boss. That was how it was under the last Labour Government.

As colleagues will recall, in 2007 we had a change of Prime MinisterGordon Brown took over—and proposals were made by our former Chancellor, George Osborne, to end the non-domiciled tax loophole. The Labour party wants to tell us, and wants the House to believe, that this was all Labour’s idea, but it was not. We all remember that it was George Osborne who proposed ending the non-domiciled tax loophole. I remember that, because I was advising him when he was our shadow Chancellor, and I recall the Labour Government saying that this could not be done because of the US-UK tax treaty. They came up with all sorts of reasons why it could not be done. They said it could not be done because it would mean that nurses would not come to the UK, as they depended on their non-dom tax status. Labour came up with every “dog ate my homework” excuse as to why non-domiciled tax status should stay as it was. Colleagues will recall that after our party conference the opinion polls changed sharply because people loved the idea of the inheritance tax break that was to be funded by the excellent Conservative policy of ending this shameful loophole.

After that, partial action was taken on non-domicile tax. It is welcome that further action is being taken today, but we must bear in mind that Labour has never made the running on this issue. It has always been the Conservative party—the workers’ party that we are—on the side of hard-working people and the hard-working classes that has made the running, and forced action and reform, on this 200-year-old abuse of our tax system. Labour Members, now trying to make up ground, should hang their heads in shame at the fact that for so many years they took so little action on this matter.

Some other abuses of the tax system are touched on by this Bill, although not sufficiently and they ought to be touched on more. One of those relates to image rights. For too long, footballers have been able to say that money that they earn is not taxable income but is due to their image rights, and they are able to keep that money offshore. We should look at that, and I hope that the Government will consider introducing changes in Committee or on Report to make sure that image rights are properly captured as the disguised remuneration that they are. The Government are to be commended for taking a lot of action on disguised remuneration, but further action is needed on image rights to make sure that footballers and other sports stars have proper payments and that proper dues are paid to our tax system.

Finally, let me talk about the clauses in part 3 dealing with fulfilment houses. This sounds innocuous, but it is about overseas sellers who are failing to charge VAT on online sales. Let me explain briefly what happens. Say, for example, a small businessperson in a regular county such as Northamptonshire sells sunglasses and is doing really well. They are sourcing them from the far east and importing them to the UK, doing really great trade selling them on the internet through Amazon and eBay. They are registered as a trader and paying VAT—they are paying their dues. Suddenly, they find that those sunglasses are being sold on online platforms such as Amazon, eBay and Alibaba—these platforms are all the same—for 20% less. They think, “How can that be?”, because that is less than the price at which they are able to buy them and then do business. The answer is that the person they have been purchasing from has realised that they, too, can sell sunglasses on these online platforms and, because they are overseas, they can play a game and not account for VAT at all.

The measures in the Bill to try to stamp out such abuse, which costs the Exchequer between £1.5 billion and £2 billion a year—perhaps more; no one is quite certain—are welcome, but they do not go far enough. I would like Ministers to consider going further and, rather than a registration-type scheme, having a simple rule that says there is joint and several liability on the part of the online platform—let us say eBay—such that the platform itself has to account for VAT if it is not paid by the seller. As sure as eggs is eggs, the online platform will pretty soon ensure that VAT is paid and accounted for if it is on the hook itself if the VAT is not paid. I hope Ministers will consider that, be firm, and ensure that we are not lobbied by large multinationals such as eBay, which do not exactly pay a lot of tax in this country themselves because they claim to be elsewhere.

The Government should ensure that there is joint and several liability to make sure that the money is collected, because £2 billion of tax revenue per year is at stake. Goodness knows, we always hear Treasury Ministers, Government officials and the Treasury as a whole complaining that they find it so hard to come up with ideas as to how to raise taxes; well, here is one right before us. I urge Ministers to give full consideration to the possibility of going that bit further, tightening up the legislation and making sure that the tax is paid. It is important not only from the point of view of revenue, but from the point of view of ensuring there is a level, competitive playing field, so that small businesses in this country can compete fairly with overseas enterprises and the tax system is not tilted against the person who is working hard to make a living in this country.