Taxation: Avoidance and Evasion — Question

– in the House of Lords at 2:41 pm on 26th January 2016.

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Photo of Lord Dubs Lord Dubs Labour 2:41 pm, 26th January 2016

To ask Her Majesty’s Government what action they are taking to reduce tax avoidance and evasion by individuals and companies.

Photo of Lord Ashton of Hyde Lord Ashton of Hyde Lord in Waiting (HM Household) (Whip)

My Lords, in the summer Budget 2015 the Government announced measures that would raise at least £5 billion per year through tackling avoidance, aggressive tax planning, evasion and non-compliance in the tax system. This included an £800 million investment to strengthen HMRC’s evasion and non-compliance activity, enabling it to recover a cumulative £7.2 billion over the next five years. A further package of measures was announced in the Autumn Statement 2015 which is forecast to raise a further £700 million by 2021. Further details are available on the internet—through all well-known search engines.

Photo of Lord Dubs Lord Dubs Labour

Well, my Lords, I am bound to say that it sounds good but on examination it is not. I wonder if the Minister could explain the Government’s attitude to the Google deal. The Chancellor says it is a great success. The Prime Minister does not seem to know and says it is a good step forward. Many Conservatives say that the deal is derisory. It is difficult to know what the Government’s view is. Secondly, could the Minister say something about letting the truth come out about deals such as this? In the Evening Standard today there is an opinion poll: 80% of the public want more openness. Surely it is time we said goodbye to taxpayer confidentiality so that we can learn what is going on in our name and have a better tax system.

Photo of Lord Ashton of Hyde Lord Ashton of Hyde Lord in Waiting (HM Household) (Whip)

My Lords, it is a tricky question to determine between the different statements of the Prime Minister, the Chancellor and others. I am afraid I have not seen all their comments in context; I would need to see those before I am able to deliver my final judgment. Taxpayer confidentiality is a long-established principle and it is important that details of confidentiality are maintained, and that applies to everyone. What we want is fair payment of tax by everyone, be they large or small companies, or individuals.

Photo of Lord Crickhowell Lord Crickhowell Conservative

My Lords, the small businesses of the town of Crickhowell have launched a campaign under the name Fair Tax Town because many of them are paying more corporation tax than the big international corporations. Despite what my noble friend has said about action being taken, many of them feel that that action is so far quite inadequate. Will my noble friend give me an assurance that a really determined effort will now be made by the Government to sort out this unacceptable situation?

Photo of Lord Ashton of Hyde Lord Ashton of Hyde Lord in Waiting (HM Household) (Whip)

My noble friend is right that we expect all companies, large and small, to be treated equally and to pay the tax that is due. This Government have reduced corporation tax. The quid pro quo for that is that when it is due on taxable profits, it should be paid. We are also tackling this internationally, because with multinational companies it has to be taken worldwide. That is why we have led the efforts in the G20 on the base erosion and profit shifting project, and we are now leading the group of 94 countries in the OECD which are implementing that.

Photo of Baroness Kramer Baroness Kramer Liberal Democrat Lords Spokesperson (Treasury and Economy)

My Lords, my heart rather goes out to the Minister, so let me ask him an easy question. Fifty-five per cent of calls by ordinary taxpayers and small businesses are not answered by HMRC. Will the Government consider spending their rather derisory settlement from Google on staffing its phones, so that the many people trying to pay their taxes actually can?

Photo of Lord Ashton of Hyde Lord Ashton of Hyde Lord in Waiting (HM Household) (Whip)

I answered exactly that question a few weeks ago, and I am happy to point out that HMRC has recruited 3,000 new staff into customer service roles on flexible working patterns to address just that point. This will provide 1,800 additional people working on telephone helplines outside normal office hours, when many customers choose to call. More than 900 people from across HMRC have also been moved into these posts. I think everyone agrees that the previous service was substandard, but it is improving.

Photo of Lord Davies of Oldham Lord Davies of Oldham Shadow Spokesperson (Treasury)

My Lords, I, too, sympathise with the Minister but of course, this same trick was played in the Commons. Junior Ministers responded to the issues there, as here, instead of those who are meant to take the decisions. The Minister has just confessed to the House that he does not have a clear line to answer the Question that was posed to him, but the rest of the country is quite clear that the deal struck with Google is an outrageous one. Can the Minister therefore answer this question? The United States is signed up to the OECD precepts, as is the Chancellor, so how come the US can tax major companies with considerable success and get the percentage of tax it expects, when in the United Kingdom, multinationals in particular pay an absolutely derisory rate of corporation tax?

Photo of Lord Ashton of Hyde Lord Ashton of Hyde Lord in Waiting (HM Household) (Whip)

I am grateful for the sympathy of the noble Baroness and the noble Lord but I do not think that I need it today. The fact is that HMRC has taxed the full amount of UK taxable profits at the statutory corporation rate. One of the reasons why this country is attracting inward foreign investment is that it has a rule of law and treats people according to the rules.

Photo of Lord Wigley Lord Wigley Plaid Cymru

My Lords, I add my voice to that of the noble Lord, Lord Crickhowell, who emphasised the strength of feeling among small businesses, which pay their tax honourably and on time, when they see the fat cats getting away with it in this manner. Have the Government considered introducing turnover tax as an alternative to corporation tax, in circumstances where such companies are shuffling their corporation tax to other countries? A turnover tax is something they could not avoid.

Photo of Lord Ashton of Hyde Lord Ashton of Hyde Lord in Waiting (HM Household) (Whip)

The noble Lord puts his finger on an interesting question. At the moment, as I said, it is a corporation tax based on taxable profits. It has never been done on turnover but what we are doing is making sure that taxable profit rests in the country where the economic activity takes place. That is why we introduced the diverted profits tax. However, I note that the Treasury Select Committee has agreed terms of reference to look at the corporate tax base.

Photo of Baroness Knight of Collingtree Baroness Knight of Collingtree Conservative

My Lords, can my noble friend tell the House whether the problem remains of having foreign people who have never learned how to speak the language looking after sick people? There was quite a lot of publicity about it. Are patients always able to talk to a nurse who understands the language?

Photo of Lord Ashton of Hyde Lord Ashton of Hyde Lord in Waiting (HM Household) (Whip)

My Lords, it is obviously good that people who deal with the public speak fluent English. That is why we are introducing such a provision in the Immigration Bill.