Question proposed, That the clause stand part of the Bill.

With this it will be convenient to discuss the following:

Schedule 12.

Clauses 31 and 32 stand part.

Schedule 13.

Clauses 33 and 34 stand part.

New Clause 2—Review of measures to tackle evasion and avoidance—

“(1) The Chancellor of the exchequer must, within three months of this Act being passed, publish a review of the measures in sections 31 to 33 to tackle evasion and avoidance.

(2) The review under subsection (1) must include details of—

(a) the average sentence handed down in each of the last five years for the offences listed in section 31;

(b) the range of sentences handed down in each of the last five years for the offences listed in section 31;

(c) the number of stop notices issued in each of the last five years to which the measures in section 33 would apply; and

(d) the estimated impact on revenue collected in each of the next five financial years resulting from the introduction of the measures in sections 31 to 33.”

This new clause would require the Chancellor to publish details of the sentences given and stop notices issued in each of the last five years to tackle evasion and avoidance, as well as the revenue expected to be generated from the measures to tackle evasion and avoidance in this Act in each of the next five years.

New clause 4—Assessment of impact of Act on multinational profit shifting and tax competition between jurisdictions—

“(1) Within six months of the passage of this Act, the Chancellor of the Exchequer must carry out an assessment of the impact of section 21 and Schedule 12 of this Act on multinational profit shifting and tax competition between jurisdictions, and lay a report of that assessment before both Houses of Parliament.

(2) The report must consider the efficacy of the measures contained in section 21 and Schedule 12 in achieving the policy objective of combatting base erosion and profit shifting.”

This new clause would require the government to produce an assessment of the impact of the Bill’s “Pillar Two” measures, in order to ascertain whether these measures have been successful in achieving their policy aims.

New clause 5—Tax compliance reporting—

“(1) Within six months of the passage of this Act, the Chancellor of the Exchequer must carry out an assessment of the impact of sections 31 to 34 and Schedule 13 of this Act.

(2) The report must consider the capacity and ability of HMRC to enforce compliance with the measures contained in sections 31 to 34 and Schedule 13 of this Act, including setting out staffing arrangements within HMRC's Customer Compliance Group for undertaking enforcement work relating to sections 31 to 34 and Schedule 13 of this Act.”

This new clause would require the government to produce an assessment of the impact of the Bill’s tax evasion and avoidance measures. The assessment would need to examine whether the capacity and ability of HMRC was sufficient to properly enforce those measures.

New clause 7—Review of effectiveness of section 31 measures in preventing fraud involving taxpayers’ money—

“(1) The Chancellor of the Exchequer must, within three months of this Act being passed, conduct a review of the effectiveness of the provisions of section 31 in preventing fraud involving taxpayers’ money.

(2) The review must evaluate the effectiveness of the provisions of section 31 in preventing fraud involving taxpayers’ money through comparison with the effectiveness of—

(a) other measures that seek to prevent fraud involving taxpayers’ money, and

(b) the approach taken in other countries.”

This new clause would require the Chancellor to review the effectiveness of measures in this Act to prevent fraud involving taxpayers’ money, and to compare them with other measures that seek to prevent fraud involving taxpayers’ money and the approach taken in other countries.

Clauses 21 and 31 to 34 and schedules 12 and 13 cover technical changes to pillar 2 of the international tax agreement—doubling the maximum sentence for the most egregious forms of tax fraud—the introduction of new powers to tackle the promotion of tax avoidance, and action against fraud in the construction industry scheme.

The UK’s tax gap is currently at an all-time low, at 4.8% of total tax liabilities. That is due to strong Government action to tackle all forms of non-compliance in the tax system, but we are never complacent. That is why we have introduced more than 200 measures since 2010, including 40 since 2021, to reduce the tax gap even further. The Government are taking action to ensure that individuals and companies pay the taxes that are due in the UK. We want to deter individuals from committing fraud in the first place. That is why we are doubling the maximum sentence for tax fraud.

The Government are also taking action against tax avoidance by introducing a new criminal offence of the promotion of tax avoidance and by expediting the disqualification of directors of companies that promote tax avoidance. The measures are designed to protect tax revenues, which are important for funding our vital public services.

It is also important to protect tax revenues from companies shifting profits offshore. That is why the UK implemented pillar 2 on 31 December 2023. We are updating existing legislation with technical amendments today to ensure that UK legislation is consistent with newly agreed guidance, to address further stakeholder comments to clarify terms, and to avoid unintended consequences.

Clause 31 strengthens our enforcement powers when it comes to tax offences. It doubles the maximum prison term, from seven years to 14 years, for individuals convicted of the most egregious cases of tax fraud. This applies to all taxes and duties administered by HMRC. It also increases the maximum penalty for counterfeiting from 10 years to 14 years. These measures demonstrate, I hope, the Government’s intent to crack down on tax fraud and to deter criminal actions that damage the public purse.

Clauses 32 and 33 and schedule 13 seek to target the promotion of tax avoidance, in order to protect taxpayers and reduce the damage inflicted on the public finances. Recent powers such as HMRC’s power to name promoters and their schemes, and its power to issue stop notices, are effectively disrupting promoters’ activities. None the less, a small number of promoters persist in attempting to sidestep the rules, so clause 32 and schedule 13 enable HMRC to act swiftly to seek the disqualification of directors and other individuals who control or exercise influence over companies involved in the promotion of tax avoidance. They enable the removal of those individuals from the avoidance market and will deter others from becoming directors of companies that promote avoidance.

In the Finance Act 2021, the Government introduced rules that allow HMRC to issue stop notices that require promoters to stop promoting specified tax avoidance schemes. Stop notices are an important deterrent tool, as failing to comply with a stop notice can lead to a substantial civil penalty. Clause 33 increases the consequences of failing to comply by introducing a new criminal offence, which will apply to promoters who continue to promote an avoidance scheme after receiving a stop notice. Creating a criminal offence signals the severity of this issue and reinforces the importance of complying with a stop notice.

Finally, clause 34 tackles serious non-compliance in the construction industry. The construction industry scheme requires contractors to withhold tax unless a subcontractor holds gross payment status. Most gross payment status holders are legitimate and compliant construction businesses but, in recent years, gross payment status has been used by organised crime organisations to facilitate fraud. This allows unscrupulous actors to compete unfairly against legitimate businesses. Clause 34 therefore strengthens the tests for gross payment status by adding VAT to the taxes with which subcontractors must demonstrate compliance. This measure is predicted to raise around £300 million over the next five years.

Each of these clauses helps to protect vital tax revenue used to fund our public services. They seek to deter taxpayers from knowingly defrauding the Government and encourage them to act against the promotion of tax avoidance. I therefore ask that clause 21, clauses 31 to 34 and schedules 12 and 13 stand part of the Bill.

I call the Shadow Minister.

I rise to speak to the new clauses in my name and that my hon. Friend Tulip Siddiq.

Clause 21 and schedule 12 relate to the implementation of pillar 2 of the OECD/G20 inclusive framework on base erosion and profit shifting. Labour supports this clause and schedule as they are intended to modify the existing multinational and domestic top-up taxes introduced in the Finance (No. 2) Act 2023, to make sure these new taxes work as intended. We have long supported the global deal on the taxation of large multinationals, as we want to see it working as effectively as possible.

We know that the OECD guidance on implementing the deal is coming out in tranches, so it is important that UK legislation is updated to reflect that. We recognise that, as with any global deal of this scale, its details are complicated and its implementation will take time, yet we have been clear throughout its development that we support the principle of a global agreement as a crucial step in making the tax system fairer, thereby helping to make sure that British businesses that pay their fair share of taxes are not undermined.

Indeed, nearly three years ago, in April 2021, I first set out in the Commons our support for a global deal to make that tax system fairer, to make sure that a level playing field is there for British businesses and to stop the international race to the bottom on tax for large multinationals. The Treasury Ministers at the time appeared at first lukewarm in backing plans emerging from the United States for a global deal. Eventually, however, the then Chancellor, now the Prime Minister, began to support the deal in public. We were glad that the current Prime Minister seemed to have come round, but I am not sure all his Back Benchers have. For instance, I wonder whether Richard Fuller would agree with the Prime Minister when he said:

“We now have a clear path to a fairer tax system, where large global players pay their fair share wherever they do business.”

We agree with the Prime Minister on that point, but I just wonder whether everyone on the Conservative Benches does. I am reading some of their faces and I think the answer is clear. Could it be that the Prime Minister lacks support from prominent Back Benchers within his own party on a policy he is now championing? Surely not. But Treasury Ministers should rest assured that if their Back Benchers pull any tricks on clause 21, they will have our support for it to pass.

Of course, clause 21 relates to pillar 2 of the OECD deal, which seeks to make sure that large multinationals pay a minimum rate of 15% corporate tax in every country in which they operate. There is, of course, also pillar 1, which involves partially reallocating taxing rights over the profits of large multinationals to the jurisdictions where consumers are located. We know that the implementation of pillar 2 is going ahead, as this Bill makes clear, but pillar 1 appears to have slowed. So I would be grateful if the Minister provided an update to the House of progress toward the implementation of pillar 1. We know, for instance, that there is still work to be done to reach the necessary agreement between all major economies, so perhaps he would confirm whether the Government are still committed to pillar 1 being implemented. If so, what steps has he taken since taking up his role to help make that happen?

Clause 21 relates to making sure that large multinationals pay their fair share of taxes, but clauses 31 to 34 deal with wider questions of tax avoidance and evasion. We believe the Government should make sure that there are always tough prison terms and powerful deterrents for those who commit fraudulent tax evasion and other serious tax offences, and that those punishments should be well publicised and effectively enforced. Likewise, Labour believes there is a strong case for tougher punishments for those who commit fraud against public services, Government and the public purse. Other countries have stronger Laws and sanctions than the UK has for such offences, which mean that judges can hand down tougher punishments to criminals who have ripped off the taxpayer, such as by wilfully defrauding the country through public contracts or business support. Our new clause 7 would require the Government to be open and honest about what they are doing to prevent fraud involving taxpayers’ money, in terms of the measures in this Bill, other measures more widely and in comparison with the practices overseas. Those who defraud the taxpayer are stealing from the country and it weakens our public services. We want to see fraudsters and organised crime gangs met with the full force of the law. As a country, we should have the most effective possible measures in place to prevent fraud involving taxpayers’ money. Our Amendment today will be the first step in making sure that that is the case, and I urge all MPs to join us in voting for it.

In the legislation before us, we see the Conservatives trying to act tough by raising the maximum prison term for tax offences from seven to 14 years, but the Government’s own figures reveal that average sentences for tax fraud are just two years—once again, they cannot hide from their record. They have failed to take tax fraud seriously, and any changes they make after 14 years in office are far too little, far too late. It is clear from an HMRC report looking at the approach taken by its fraud investigation service towards tax compliance and serious fraud in 2022-23 that the average length of custodial sentencing was 24 months. We believe that the public deserve more information on how sentencing is working under the current Government, so our new clause 2 requires data to be published setting out the average sentence, and the range of sentences, handed down in each of the last five years for the offences that clause 31 applies to. I urge Ministers to accept our new clause 2, but if they are not willing to do so, will they write to me with details of all the information that it requests? Whatever that data may show, it seems clear from the data that is already available that under the Conservatives sentences appear to be nowhere near the existing seven-year maximum, and so 14 years seems even more distant a prospect. Whatever the Government may say about sentencing, our courts system is already hamstrung by being neglected and facing the highest backlog on record—65,000 cases in the Crown courts and over 350,000 in the magistrates courts. We will not oppose clause 31, but this debate has made clear the depth of the Conservatives’ failure on law and order, and just what a mess they have created.

Clause 32 and schedule 13 would enable HMRC to bring disqualification action against directors of companies involved in promoting tax avoidance. We support the principle behind the clause and will not oppose it. However, as the Chartered Institute of Taxation and, in particular, the Low Incomes Tax Reform Group have helpfully pointed out, there are questions about making sure these powers are targeted and used correctly. These questions arise because of cases where the true promoters of tax avoidance schemes recruit others, often vulnerable or naive individuals, to be directors of the company involved, thereby shielding themselves from any action. To be effective, the legislation needs to respond to that situation. On the one hand, the law needs to be able to pursue those ultimately responsible, whether they are formal directors or not. On the other hand, there needs to be a degree of discretion about the punishment of those recruited to be sham directors when they may be vulnerable people.

On the first of those points, I understand that the Government are aware that those ultimately behind an avoidance scheme may not be directors themselves and the legislation seems to recognise that. As the Low Incomes Tax Reform Group pointed out, the original draft legislation referred to directors, Shadow directors and managers, which they felt covered the full range of people who may be behind tax avoidance schemes. However, while the legislation includes references to shadow directors, the category of managers is no longer mentioned. In his response, will the Minister explain the rationale behind removing the reference to managers and consider whether that needs to be reconsidered?

On those recruited to be sham directors, the Low Incomes Tax Reform Group has given powerful examples of where young or vulnerable people can be recruited without understanding what they are getting into. While ignorance is not an excuse, it is reasonable for HMRC to ensure that the consequences for vulnerable individuals who have unwittingly got involved are not unreasonably harsh.

Furthermore, this is about not only protecting vulnerable people but ensuring the sham directors do not end up taking the fall for those behind the scheme, thereby letting the latter off being punished and leaving them free to exploit a new round of vulnerable recruits. In his response, will the Minister explain what processes and checks HMRC will be putting in place to identify vulnerable people, thereby making sure that any action against sham directors is appropriate for the individuals concerned?

We know that there is a wider issue of bad faith actors setting up shell companies with fake directors, and then using those shell companies for a range of purposes, including the practice of sitting behind dodgy American-themed candy stores to avoid paying business rates. We have been calling for tougher identity-verification requirements for new companies. In the case of business rates, this would strengthen councils’ ability to take enforcement action against those who do not pay their Bills. I realise it is beyond the scope of this debate, but will the Minister write to me with details of what conversations he has had with the Secretary of State for Business and Trade about using powers in the Economic Crime (Transparency and Enforcement) Act 2022 to specify identity verification requirements for new companies with Companies House?

Clause 33 introduces a new strict liability criminal offence for failing to comply with a stop notice issued by HMRC in relation to a tax avoidance scheme. In practice, this clause will escalate the punishment for failing to comply with a stop notice from its current position, which is penalties of up to £100,000 or £1 million in certain circumstances, to instead meaning that the promoter has committed a criminal offence if they fail to comply with a stop notice without a reasonable excuse.

We welcome firm action being taken against those promoting tax avoidance schemes. However, the Chartered Institute of Taxation has made it clear to HMRC that it is concerned that the decision to issue a stop notice, and thereby determine that a criminal act may have been committed, will rest entirely with HMRC with no external oversight. To make sure that appropriate safeguards are in place, I understand the Chartered Institute has proposed that failure to comply with a stop notice should be a criminal offence only if judicial approval for the issue of the notice has been obtained first. Alternatively, at the very least, the Chartered Institute of Taxation has made it clear that HMRC’s internal governance overseeing the issuing of stop notices must work effectively. Similarly, the Institute of Chartered Accountants in England and Wales has proposed a number of safeguards, which I understand the Government have said that they will not consider. The ICAEW has also suggested that such stop notices should be issued only through a decision taken at a higher level of seniority within HMRC than at present.

I understand that HMRC has said that it does not support any of the range of safeguards proposed by these representative bodies, but has said that it will be sharing a clear picture of its governance process in due course. I would be grateful if the Minister confirmed when that will happen, and what checks and balances he expects this governance process to enshrine.

Finally, I will address clause 34, which relates to the construction industry scheme and gross payment status. Under the construction industry scheme, we know that contractors make deductions from payments to subcontractors and pass that money on to HMRC as an advance payment against the subcontractors’ tax liabilities. We know that a subcontractor can avoid this money being withheld by applying for gross payment status. Clause 34 limits those subcontractors who can hold this status by excluding any who fail to meet VAT obligations and who are involved in various categories of tax fraud. We welcome the principle of this measure in setting out to penalise subcontractors who do not follow the rules on tax. However, we recognise the concern, which was again raised by the Chartered Institute of Taxation, that it could have a disproportionate effect on the cashflow and reputation of subcontractors if they were to lose gross payment status as a result of minor VAT compliance failures.

We therefore welcome the fact that, as we understand it, draft regulations have been published to attempt to address this point. I would welcome the Minister’s further reassurances today that the Treasury will engage with the industry, including the Chartered Institute of Taxation, to make sure that the regulations are effective.

As I have made clear, we will not be opposing the clauses being considered in this debate, but I look forward to the Minister’s response to the detailed questions that I have raised in relation to them.

I wish to raise just a couple of points. Let me turn to the issues of pillar 2 and the moving forward of the Government’s policy on that in Clause 21 and schedule 12. Obviously, that relates to changing the decision maker on the taxation rates for multinationals operating in this country from the British Government, elected by the British people, to the determinations of an international organisation through treaty.

As we move forward, it is important to be aware of the changing context. Hon. Members, particularly those from the Conservative Benches, have raised in the past the issue of who else is coming along to this particular minimum tax global party. We already know that China, one of the major economic actors in the world, is not part of the OECD, will not be complying with us and will not be part of these regulations. First, I am interested in any updates the Minister may have on those views about China. Secondly, it is clear that there will be an election in the United States later this year and that there is a significant difference in opinion between the Republican party and the Democrats about whether they will enact the US’s part in the taxation policies of pillars 1 and 2—particularly in pillar 2. Given that there is a reasonable chance—some say it is better than a 50:50 chance—that there may be a change in Administration in November and the United States could then withdraw from participation in the OECD process, can the Minister, in his summing up, give some reassurance to those Conservative Members who, although always supportive of the Prime Minister, may just want to make sure that we have clarity on what we would do in the eventuality that neither of the two major economies in the world—the United States and China—are taking part in this particular global minimum tax from multinationals.

I would also be interested to hear from the Minister—perhaps not from the Dispatch Box today, but separately with the taxation Minister—where the definition of certain words is moving in the Treasury and HMRC when it comes to tax avoidance and tax evasion. I recall that, many years ago, the difference was that tax evasion was illegal and that tax avoidance, while perhaps not what the HMRC wanted to happen, was legal. We see in the Finance Bill references to tax avoidance that imply that it is illegal. I worry that there is insufficient clarity, from HMRC’s perspective, on the difference between tax evasion, which is illegal, and tax avoidance, which is legal but perhaps not desirable. Perhaps the Minister could give some clarity on that.

All those on the Treasury Bench will be aware of the persistence of the concerns about the loan charge and other aspects of tax avoidance schemes, which HMRC has gone to court over, winning in certain actions and then deciding to apply blanket solutions to cases where there has never been a finding of fact in a court regarding the particular schemes. My specific question—I hope that this is within scope, Dame Rosie; you will tell me if it is not—is why we have not brought HMRC’s approach on tackling the loan charge to a conclusion. People have been pursued for far too long in an area that is far too grey. It would be interesting if the Minister had an update on that.

Lastly, I commend the Shadow Minister, James Murray. I did not like his speech on the first group, but I thought that his speech on the present group was very good and very reasonable. He made a very important point, which I am sure the Government will want to look at, on failure to comply with stop notices, and the requirement—proposed, I think he said, by a third party—for some sort of judicial approval before a notice is issued. At the moment, the Bill basically says that HMRC, undefined, can issue such notices. That really is quite a significant further expansion of HMRC’s responsibilities. The shadow Minister referred to a good point: more protection is needed for those who might be caught by such notices. I am sure that those on the Government front bench always listen to points made on both sides of the House, but I thought that I would commend that point from the shadow Minister.

I will speak to new clauses 4 and 5, tabled in my name. I reiterate that the Liberal Democrats do not support the Bill, which is a deception from the Government after years of tax hikes on hard-working families. It arises from an autumn statement that contributed to a record fall in living standards by maintaining the Government’s stealth tax on working families through the freezing of income tax thresholds. Some of the measures under consideration today may have worthy aims, but that wider context must be noted.

New Clause 5, tabled in my name, would require the Government to produce an assessment of the impact of the Bill’s tax evasion and avoidance measures. That assessment would specifically need to include a review of whether the staffing of the compliance functions of HMRC is sufficient to implement the new measures. That follows the revelation to me in answer to a parliamentary question last year that almost 2,300 HMRC tax compliance staff are still working on matters relating to our exit from the European Union and covid-19 schemes. That means that thousands of staff who would usually be working on recovering taxes or dealing with other issues are instead being redeployed to manage the Government’s mishandling of the pandemic and the Brexit deal.

It is alarming to see civil servants being moved from one crisis to another—an indication of a Government in non-stop firefighting mode. We have known for a long time that HMRC is an organisation beset by understaffing issues. Last year, the Institute of Chartered Accountants in England and Wales said that such chronic understaffing is not only causing unacceptable delays to businesses and families but hindering activity and actively hurting our economy. With that knowledge, can we have faith that HMRC will be properly equipped to put the measures in the Bill into action?

While the measures in clauses 31 to 34 and schedule 13 may have worthy aims of combating tax avoidance and fraud, the knowledge of those shortcomings makes it very difficult to have confidence in the capacity of HMRC, and in particular its compliance functions, to administer the measures effectively. I therefore urge the Government to accept new clause 5, and support the Liberal Democrats in ensuring that HMRC is fully equipped with sufficient staff to tackle tax avoidance properly.

New clause 4, also in my name, concerns the Bill’s pillar 2 measures, in clause 21 and schedule 12. It would require the Government to produce an assessment of the impact of those measures, examining whether they have been successful in achieving their policy aims. As Liberal Democrats, we strongly believe in the need for a fair international system that tackles corporate tax avoidance and evasion for the benefit of all countries. We welcome the pioneering work that has taken place under the auspices of the OECD for the formation of a fairer international tax system. The measures in clause 21 arise from that process and enable the UK’s adoption of the income inclusion rule and domestic minimum top-up tax rule. As such, they are to be welcomed; however, issues remain.

Most crucially, we believe that the global minimum corporation tax rate set at 15% under the deal remains too low. Liberal Democrats have called on the Government to help negotiate an increase to 21%, as originally proposed by the US under President Biden. Organisations such as Oxfam have highlighted that the 15% minimum rate still leaves many developing countries at a disadvantage, as they will continue to face unfair competition from tax havens. It is extremely disappointing to see the Government’s failure to back a rate of 21%, despite having raised UK corporation tax to 25%. The significant progress that has been made should not be obstructed or diluted, but if we are serious about pursuing the goal of a fairer global tax system, we must also take the time to ensure that the best path is being followed.

I welcome the hon. Member’s Intervention, and—dare I say it—I completely agree with him. Of course, one is constrained by what one can amend in legislation, but I would like to see that as the start of an ongoing process of review. Let us be honest, it is an innovative proposal, not just because it requires an international co-operative effort, but because that very effort is innovative. It is therefore something that we as a sovereign Parliament should be keeping very much under review as the work continues.

I briefly note that the Finance Bill has implications for theatre tax relief, which plays a crucial role in enabling the development of new theatre productions in the UK. UK Theatre and the Society of London Theatre have raised concerns with the Treasury about those implications, which could damage how that essential relief operates. I therefore urge Ministers to liaise with those groups and particularly to provide assurance that international touring will not be hampered due to the Bill’s definition of UK expenditure. That is certainly an area that would benefit from scrutiny in Public Bill Committee.

Although the Liberal Democrats support certain measures in the Bill, such as the extension of full expensing, the Bill as a whole does not have our support, arising, as it does, from an unjust and deceptive autumn statement. I urge hon. Members to support the amendments tabled in my name, in particular new Clause 5, which would hold the Government to account to ensure that HMRC is properly resourced to allow it to implement the measures in the Bill.

I thank hon. Members from across the House for their contributions. I will speak relatively briefly but will try to address some of the points raised. I will deal last with the new clauses, and in the meantime address some of the questions from James Murray from the official Opposition. He asked about pillar 1 and the progress being made. This Government fully support pillar 1 and are keen to maintain momentum on its progress as soon as possible. He should take comfort from the recent publication of the substantially agreed text of the multilateral convention. That demonstrates progress, but as I say, we are not complacent on that and are keen to see further progress as soon as possible.

The hon. Gentleman very reasonably asked for more information on sentencing and the action taken by HMRC. I will give him some data. Last year, there were 240 prosecutions. Within that, there were 218 convictions, and 130 of those were custodial sentences and 110 were suspended sentences. That equates to a 90% success rate for HMRC. The hon. Gentleman is right that the average length of a custodial sentence is 24 months. We want to extend a maximum sentence for two reasons: first, to make it clear that we consider fraud and all fraudulent activity some of the most serious crime possible because of its impact on public finances; and secondly, because if the maximum sentence increases, we expect all sentences to rise, as sentences are judged relative to the maximum sentence. However, I stress that it is the Sentencing Council that issues the guidance to judges and it is ultimately judges and the courts who rightly decide what sentences are given to those found guilty.

The hon. Gentleman asked about safeguards for stop notices, and he is right to highlight that that is an important measure for HMRC. I can tell him there have already been 20 stop notices issued since HMRC started issuing them just a year ago, but there are robust governance processes and safeguards in place, including review and appeal rights. However, any criminal sentences are decided by the courts and it is the Sentencing Council that will decide on that. I will look carefully at the other questions he has raised and ask for a written response. If we have that data, I commit to writing to him with that information.

My hon. Friend Richard Fuller has rightly and consistently raised his questions and concerns on pillar 2. I can tell him that the UK is implementing pillar 2 in time and alongside EU member states, Japan and Canada, which I think he would agree are all peers. He asked about China. China has not announced implementation plans for pillar 2, but it is a member of the inclusive framework of countries that are in negotiations right now on pillar 2 and we are monitoring that very carefully, as he would expect. The US Administration have always supported both pillars 1 and 2 and have been one of the strongest advocates for them; as he will know, in 2017, the United States introduced its own domestic version of pillar 2, requiring those companies with foreign income to pay a minimum level of taxation.

The punchline, to answer my hon. Friend’s ultimate question, is that already the agreement has been put in place to ensure that, by 2025, 90% of multinationals will be in play, so we are confident in the robustness of that agreement. He asked about the loan charge; I do not believe that is in scope for this debate, but the Financial Secretary to the Treasury will follow up with him and engage with him and the loan charge and taxpayer fairness all-party parliamentary group in due course.

I will briefly address the new clauses that have been laid down. I will deal with new clauses 2, 5 and 7 together, as they all relate to tax avoidance and evasion, and then I will address new Clause 4. New clause 2 would require the Chancellor to provide a report on the average sentence and range of sentences given to offences being amended in clause 31, the number of stop notices issued that clause 33 would apply to and the impact of those clauses on tax revenues. New clause 5 would require the Chancellor to carry out an assessment of the impact of clauses 31 to 34 and schedule 13 on HMRC’s compliance activities and new clause 7 would require the Chancellor to review the effectiveness of the provisions of clause 31 in combating fraud involving taxpayers money.

Let me say straight out of the gate that I agree it is important that we regularly review and evaluate policy. However, the new clauses are unnecessary, as HMRC already publishes detailed information about its compliance and performance on a regular basis. As I have said, the UK tax gap is already at an all-time low of 4.8% and will remain low and stable, given the measures that we are implementing. Every year, HMRC publishes information on the number of custodial sentences received for tax compliance offences and the average sentence length in HMRC’s annual report and accounts. The 2023-24 annual report and accounts will be published this summer, providing a full overview of HMRC’s performance. As most of that information is already publicly available in routine HMRC publications, the assessments legislated for by the new clauses are unnecessary, in our humble view.

New clause 4 would require the Government to report an assessment of the technical changes to pillar 2 introduced in clause 21 and schedule 12. It would consider the efficacy of the technical changes and their impact on multinational profit shifting and tax competition between jurisdictions. The Government consider that such a report is not necessary because the amendments in the Bill are technical changes to enhance the pillar 2 legislation that received Royal Assent just last year. Those amendments simply help to ensure that the policy objectives of the legislation are met fairly and effectively, reflecting both new international guidance and stakeholder comments. Ultimately, it is about avoiding unintended consequences in legislation that has already been passed. Of course, the Government will monitor pillar 2’s overall impact as businesses begin to respond to its implementation around the world—130 countries are privy to it.

I hope to have reassured Members that the additions in new clauses 2, 4, 5 and 7 are not necessary. For the reasons that I have set out, I urge the Committee to reject them. I commend clauses 21 and 31 to 34, and schedules 12 and 13, to the Committee.

Question put and agreed to.

Clause 21 accordingly ordered to stand part of the Bill.

Schedule 12 agreed to.

Clauses 31 and 32 ordered to stand part of the Bill.

Schedule 13 agreed to.

Clauses 33 and 34 ordered to stand part of the Bill.