Taxation: International Companies

Lord Campbell-Savours Excerpts

Tuesday 23rd October 2012 Lords Chamber

[Lord Sassoon]

The noble Lord, Lord Barnett, always wants me to be clear and simple, so the answer is no to his first two questions. On the third question, he has an underlying, quite proper, concern, which is why the work that Graham Aaronson has done for the Government on a general anti-avoidance rule, the so-called GAAR, is a very important part of ongoing work.

[Lord Campbell-Savours]

What are the Government going to do about Starbucks and its transfer pricing arrangements?

[Lord Sassoon]

My Lords, the noble Lord does not expect me for one moment to start commenting on the tax affairs of any individual taxpayer. As a general response, it may interest the House that the 800 or so largest companies that come under the large business service of HMRC to be assessed pay £136 billion in corporation tax, PAYE and VAT each year. Almost 50% of that tax comes from foreign-owned businesses, so I do not think we should have in mind that foreign-owned companies as a group are somehow doing something that we have to be vigilant about. We must keep this in proportion.

--- Later in debate ---

[Lord Sassoon]

I am very grateful, as I often am, for the question asked by the noble Lord, Lord Davies, because it enables me to tell the House, as I have done before, that £900 million has been reinvested in the compliance activities of HMRC precisely because we need to do more work to attack avoidance, evasion and criminal attacks on the tax system. Compliance revenue has more than doubled in six years so that by 2014-15 an additional £7 billion per annum will be coming in. The noble Lord’s concerns are quite right, and this Government are very actively on the case.

[Lord Campbell-Savours]

My Lords, the Minister did not answer my question on transfer pricing, which is the mechanism used to avoid paying corporation tax. Why will he not answer my question?

[Lord Sassoon]

Because, forgive me, there are other Peers wanting to get in. I completely agree with the noble Lord that transfer pricing is one of the most serious areas that need to be looked at, which is precisely why each one of those 800 large companies has a dedicated tax professional looking at this area. The focus on transfer pricing has meant that in the past four years £4 billion has been recovered precisely by going after transfer pricing schemes. On average, £1 billion a year is coming in through effective action.