Offshore Receipts in Respect of Intangible Property

Part of Finance (No. 3) Bill – in the House of Commons at 6:00 pm on 20th November 2018.

Alert me about debates like this

Photo of John Lamont John Lamont Conservative, Berwickshire, Roxburgh and Selkirk 6:00 pm, 20th November 2018

Clearly, I cannot speak about the circumstances in the hon. Gentleman’s constituency, but these measures are clearly a step in the right direction. I know the number of businesses in my constituency that contact me. They are competing with online businesses and other digital platforms to provide the same or similar types of services. It is just not fair when businesses are able to run very profitably, making a big turnover from a garage or attic, when at the same time the same service or shop on the high street is paying significantly higher business rates. Of course, in Scotland, we have the additional challenge of the additional taxes that businesses are having to pay through the Scottish Government’s high-tax agenda.

The Opposition amendments that would compel the Government to evaluate and report on the impact of these measures may appear at first glance to be reasonable enough. However, HMRC already publishes annual data on the differences between what is theoretically due and the amount of tax actually collected—the so-called tax gap. It also provides an estimate of the tax gap by type of tax and by consumer group. That provides a historical trend, as well as the annual cost of tax avoidance, which can clearly be used to assess the impact and success of these measures. I know that Opposition Members are fond of these types of review provisions because they allow them to have a go at the Government when the reports are published, but I am not sure how useful the amendment will be in practice. Will these reports mean greater progress on tax avoidance, or will they just be a distraction for a Government with an already incredibly strong record in clamping down on this type of behaviour?

On tax avoidance more generally, those who practise tax law may be happy enough with its complexity, but as politicians we should all strive to make good law, which means making the law as clear as possible. The complexity of our current tax system is making it easier to avoid paying tax, so simplification is necessary if the Government are going to make further progress in tackling tax avoidance. Much has been done to try to improve this whole process. More of the Finance Bill is now published months in advance, before the Budget, and there is extensive consultation with stakeholders before legislating. The Chancellor’s decision to replace the autumn statement and the spring Budget with a single autumn Budget ended the practice of major tax changes taking place twice a year outside of a general election year. I note that this announcement was welcomed last year by the Institute for Fiscal Studies, the Chartered Institute of Taxation and many other tax experts.

Last year’s Finance Bill ended permanent non-dom status, and this Bill adds to the track record of this Government in cutting down on tax avoidance. Conservative measures have seen £185 billion collected through anti-evasion and anti-avoidance since 2010. The difference between what should be collected and what is collected in taxation—the so-called tax gap—is now at a five-year low of 5.7%, one of the lowest in the world. These measures are more significant than anything the Opposition did on tax avoidance during their time in office, when the tax gap was about 10%. As always, Labour likes to talk the talk, but fails to act. By closing the tax gap further, we boost this nation’s tax revenues, not by putting up tax, as the Opposition want to do, but simply by ensuring that people pay the tax that they are expected to pay by law.