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

Clause 46 amends section 222 of the Finance Act 2013 to allow regulations to be made requiring financial institutions and tax advisers to provide their clients with information regarding the automatic exchange of information on financial accounts between tax authorities. The purpose of the power is to support the Government’s ongoing strategy for tackling offshore evasion.

The UK has been an international leader in implementing the automatic exchange of information agreements, including through our G8 presidency. In 2012 we were the first country to sign an enhanced automatic tax information exchange agreement with the United States. In 2013 we signed similar agreements with our Crown dependencies and overseas territories and launched an initiative for multilateral exchange on a global scale. We have since played a leading role in the development and early implementation of the new global standard, known as the common reporting standard or CRS.

To date, 95 countries and jurisdictions have committed to begin sending information automatically under the CRS in 2017 or 2018. As a result, HMRC will receive information on a wide range of financial accounts and investments, of both individuals and entities, from financial centres the world over. That represents a step change in HMRC’s ability to crack down on offshore tax evasion. To coincide with that substantial increase in the flow of information on offshore accounts, we will be introducing a significantly tougher approach towards those who continue to evade their taxes. We have been consulting on a range of enhanced penalties and criminal offences.

In advance of the CRS data being received and the ramping up of penalties, there will be a last chance for people to come forward voluntarily to pay their tax, interest and penalties. That is not a soft touch by any means, and prosecution remains an option for the worst offenders. However, providing notice and a final opportunity for voluntary disclosure is appropriate as voluntary disclosure is a practice we want to encourage. In addition to media campaigns and other communications, the powers introduced by the clause will support the disclosure process. We know from previous experience that direct communication with a customer about their accounts, whether from HMRC, their account provider or their adviser, can be an effective means of communication, getting the message across and influencing behaviour.

The power will allow notification requirements to be placed on businesses that are likely to have advised clients about offshore accounts or to have helped to set up offshore accounts, which includes financial intermediaries, tax advisers and law firms in the UK and overseas subsidiaries of such UK businesses. Under the regulations it will be possible to specify the timing, form or manner of notifications. The scope of the power allows us to enact regulations to ensure that notifications are effectively targeted and proportionate. To that end, we will be consulting closely with the financial services industry as the regulations are drawn up.

I am aware that regulations made under this power will impose burdens on financial institutions, although we do not expect such burdens to be large. However, it is right that financial institutions should play their part in rooting out evasion that increases the burden on honest taxpayers. I am pleased to report that stakeholders to whom we have spoken are generally supportive.

Our current expectation is that the regulations will require financial intermediaries and advisers to notify their UK customers or clients who are known to have, or are likely to have, an offshore account. The regulations are expected to require that they provide such customers with the following information: first, that data on offshore accounts are being collected and will be reported to HMRC from 2017 by 95 other tax authorities; secondly, that HMRC will open a final time-limited disclosure  facility in 2016 to regularise their affairs, as necessary, before the data are received; and, thirdly, that there will be a range of penalties, including possible prosecution, for those who continue not to pay the tax they owe.

As noted, we are consulting closely with the industry as the regulations are drawn up to ensure that they are workable, proportionate and effective. We also intend to discuss the possible use of this power to support other tax authorities on a reciprocal basis. Regulations under clause 46 would allow us to require those within scope to notify clients with accounts in the UK who reside in another country about the exchange of data. We would propose to put in place such a requirement only if that other country did likewise as regards accounts held by UK residents within its territory.

This clause forms an important part of our wider strategy to tackle tax evasion. It is a targeted tool to inform offshore account holders both the significant amount of data that HMRC will receive on their financial accounts and make them aware of the opportunity to disclose and the significant penalties that can be applied if they do not. I therefore hope that the clause stands part of the Bill.

Before I call the hon. Member for Wolverhampton South West, I have to remind hon. Members that unless and until the recommendation of the Chairman of Ways and Means is adopted by the House—it has not happened yet—the Chairman has no power to suspend the sitting at 1 o’clock. It is therefore up to the Government Chief Whip to move the Adjournment at the time that he feels appropriate; and if he does not do so, you do not get any lunch.

Clause 46 is a step forward. I congratulate, with one cheer, the Government on that, but it is a small step. The common reporting standard comes in, I think, from 2017. The Government are talking now about another amnesty. How many amnesties can we have? Hon. Members will remember the CD of information on tax evaders that leaked out of Switzerland and was used constructively by several other countries in Europe to clamp down on those of their citizens who had illegally squirrelled away money in Switzerland. My recollection is that we had some kind of amnesty in the United Kingdom for such citizens and, lo and behold, when the Swiss papers—the Swiss bank records—were finally opened several months later, the money had all gone walkies and the amount that the Chancellor of the Exchequer got in was far less than he had been proudly trumpeting would be recovered by HMRC because of that information.

I fear that the same may happen in this case. The clause is a step forward. As for the regulations, which are being consulted on, I say to the Minister that I have not seen it anywhere—it may be somewhere—that this advice should be given in writing and recorded in writing by the financial adviser. That would be a step forward, but a greater step forward to protecting the Revenue from this offshoring avoidance, if not evasion, would be, as I said to the Committee two days ago, to have much more pressure from Her Majesty’s Government on transparency, on beneficial ownership and on the tax havens around the world, which assist aggressive tax avoidance and sometimes assist, perhaps unknowingly, with tax evasion. Many of those tax havens, whether Crown dependencies or otherwise, have a relationship  with the United Kingdom. We have considerable leverage there and, in terms of what is disclosed publically, Her Majesty’s Government—both this Government and the previous, coalition Government—have not used that leverage as decisively as we on the Labour Benches would wish.

This externalising of costs to financial advisers, although understandable and welcome, is an externalising of costs, so the financial adviser has to remind the client of the penalties for undertaking certain types of financial transactions. Meanwhile, the number of staff at Her Majesty’s Revenue and Customs, who are one of the lines of defence against aggressive tax avoidance, is being slashed by one quarter, as I understand it, from 70,000 to 52,000 in the period 2010 to 2016. I would be delighted if the Minister could tell me that I have got that figure very wrong—I may have got it wrong slightly around the edge. If he could tell me that the number of HMRC staff is in fact being increased as part of a Government measure to increase markedly the number of staff who can help to crack down on aggressive tax avoidance and illegal tax evasion, I would be delighted, but I fear that he will not reassure me that there has been a major increase in staff. So, although the clause is a step in the right direction, it is nibbling around the edges. A much stronger and more effective way forward would be to have a larger number of properly trained HMRC staff investigating and applying pressure, and the legislation that already exists.

I welcome the support for the clause, even if the enthusiasm for it was somewhat limited. I will not dwell at length on the wider issues raised by the hon. Member for Wolverhampton South West, but it is worth pointing out that we have been a world leader in our pursuit of tax evaders. It is a driving force behind the implementation of the common reporting standard, to which all overseas territories and Crown dependencies have signed up. It is also worth pointing out that HMRC has the option to prosecute where it deems that suitable and where it is in the public interest. We are also currently consulting on tougher penalties, including new civil and criminal offences.

The common reporting standard will give HMRC access, for the first time, to data about accounts held by UK residents in over 90 countries, which will make a significant difference to HMRC’s ability to crack down on tax evasion. We are also toughening up the penalties for those engaged in tax evasion. HMRC has been consulting on new criminal offences for corporates and individuals and on new penalties, including applying to the underlying asset for individuals and enablers. The Government will report on the outcome of the consultations shortly. Disclosure facilities are one of a number of approaches—we are also introducing tougher sanctions against those who abuse the rules—and the disclosure facilities have brought in more than £2 billion in tax.

Can the Minister say briefly what the Government are doing about disclosure of beneficial ownership?

The UK is introducing a central register that is publicly available. We are leading the way on that; I am not aware at the moment of any other jurisdictions elsewhere that are pursuing that. We believe that we should set the benchmark, so I am pleased that we as a country are leading the way.

The hon. Gentleman mentioned HMRC resources and so on. He referred to headcount. He will be aware of the dramatic reductions in headcount that occurred under the last Labour Government. In the last Parliament, we invested more than £1 billion in HMRC to tackle evasion, avoidance and non-compliance between 2010 and 2015. We made more than 40 changes in tax laws, closing loopholes and introducing major reforms to the UK tax system. I think most people would agree that it is much harder to avoid and evade taxes now than it was five years ago. Over this Parliament, up to 2020-21, we will be investing more than £800 million in funding in HMRC for matters relating to evasion and general non-compliance, which will help HMRC tackle evasion.

We have a proud record. It is not purely about staff numbers, although as it happens, enforcement and compliance numbers were not reduced in the last Parliament; the reductions in head count were generally within personal tax. It is not simply about headcount; it is about making use of technology and information and acting efficiently. We have a proud record on that front and we will continue in that vein. The clause is part of that process.

Question put and agreed to.

Clause 46 accordingly ordered to stand part of the Bill.

I beg to move,

That further consideration be now adjourned.

Before I put the Question, in fairness to Members and, in particular, members of staff, let me say that the Committee has made—without indecent haste and having studied each clause thoroughly—very considerable progress. It is conceivable that we might get to the end of the Bill today. I am conscious of the fact that some hon. Members have considerable distances to travel and may therefore wish to adjourn at an earlier stage. That is entirely a matter for the usual channels; it is not for me to decide. Ordinarily, I would suspend the Committee for a comfort break after about three hours, but I want to make it plain to hon. Members and to staff—because they need to know as well—that I am perfectly prepared to stay in the Chair and see this through if that is the wish of the Committee, but that is a matter for the usual channels to consider.

Question put and agreed to.

Adjourned accordingly till this day at Two o’clock.