Taxation: International Companies

Debate between Lord Campbell-Savours and Lord Sassoon

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.

Taxation: Avoidance

Debate between Lord Campbell-Savours and Lord Sassoon

Wednesday 25th July 2012 Lords Chamber

[Lord Campbell-Savours]

To ask Her Majesty’s Government on how many occasions since 2010 officials of HM Treasury received reports and recommended action on the operation of the K2 offshore loan tax avoidance scheme, and on tax avoidance generally.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, HM Revenue and Customs was investigating the K2 scheme prior to recent press articles. HMRC does not report operational details on the specific schemes to HM Treasury but advises if a change in the law is needed. Since 2010, action has been taken on 26 occasions to close down avoidance schemes by legislation. The Government are consulting on a general anti-abuse rule and on extending the disclosure of tax avoidance schemes rules.

--- Later in debate ---

[Lord Campbell-Savours]

I thank the noble Lord for that Answer, and I am sure that we will be returning to this issue later in the Session. On the second part of my Question, is it not true that tax evasion through the failure of United Kingdom citizens and foreign nationals to pay tax on rental income from private residential property held within the United Kingdom is costing the country millions if not billions of pounds annually? Is there not an argument for local authorities to be required to register all private rented property in their area, with declarations of ownership accessible by HMRC?

[Lord Sassoon]

My Lords, the important broad picture here is that on the latest annual figures, those for 2010-11, HMRC collects approximately £469 billion a year. The estimated tax gap is 7.9%, a percentage that compares favourably with, for example, the USA at 14% and Sweden at 10%. Nevertheless, there is a gap of £35 billion and it is very important that HMRC does all that it can to close it, which is why it is prioritising this area in many respects. I hear what the noble Lord says about a specific issue and I will take his suggestion away, but I can assure the House that HMRC is prioritising it right across the board.

EU: Euro Area Crisis

Debate between Lord Campbell-Savours and Lord Sassoon

Thursday 24th May 2012 Lords Chamber

[Lord Campbell-Savours]

To ask Her Majesty’s Government what assessment they have made of the effect on the European economy and financial institutions of the crisis in the euro area.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, the Government make regular assessments of the economic situation as part of the normal process of policy development. The OBR, the OECD, the European Commission, the IMF, and many others expect a euro area recession this year. As we have said, if the euro area does not definitively sort out its ongoing problems, the uncertainty that that will create and its impact on confidence across Europe will continue to have a chilling effect on Britain and the global economy.

[Lord Campbell-Savours]

My Lords, does not Germany bear some responsibility for problems in the eurozone in that it was Germany that turned a blind eye when Goldman Sachs fixed Greece’s books to secure its entry into the euro; it was Germany that turned a blind eye to breaches of GDP limits in the European stability and growth pact; and it was Germany that promoted the euro currency to prevent regional devaluations in neighbouring nation states, thereby protecting its own export markets within Europe? Surely Germany should show a little more flexibility in these matters.

[Lord Sassoon]

My Lords, the key issue about Germany in relation to this Question is that we should be grateful that the German economy continues to grow. About 9% of the UK’s exports go to Germany. It is a very important market for us and it is critical both for us and for the eurozone that Germany and its economy continue to perform relatively strongly.

Eurozone

Debate between Lord Campbell-Savours and Lord Sassoon

Thursday 17th May 2012 Lords Chamber

[Lord Campbell-Savours]

My Lords, are Ministers saying that, if the European Union were collapsing all around us, we would stand aside and do nothing at all?

[Lord Sassoon]

No, my Lords, that is not what I have said or am saying.

Individual Savings Accounts: AIM Shares

Debate between Lord Campbell-Savours and Lord Sassoon

Tuesday 31st January 2012 Lords Chamber

[Lord Campbell-Savours]

My Lords, would the Minister care to remind the House of the scale of the collapse of companies on the AIM market? Perhaps I may say that I support the Government’s position.

[Lord Sassoon]

My Lords, the AIM market has been very successful, and I do not want to say anything to suggest that it is not. However, it is true that the number of shares on that market has come down from a peak of about 1,700 to the current figure of about 1,140, and of course there has been a similar decline in the value of the market. Therefore, it is a successful market but one that has a range of much smaller shares within it.

Eurozone Crisis

Debate between Lord Campbell-Savours and Lord Sassoon

Tuesday 17th January 2012 Lords Chamber

[Lord Campbell-Savours]

Has the Treasury carried out internally an inquiry into the level of exposure of British banks to banks within the eurozone that might collapse?

[Lord Sassoon]

My Lords, of course the FSA, in the course of its normal work, continually examines the exposure of the financial sector to a whole range of issues, including to the eurozone. The Europe-wide stress tests which were done, and done again, and finally done on a much better basis, looked at that matter last year.

Taxation: Inheritance Tax

Debate between Lord Campbell-Savours and Lord Sassoon

Wednesday 21st December 2011 Lords Chamber

[Lord Sassoon]

If we want good news, the borrowing figures announced today for November are ahead of market expectations. I can bring good news, but not gifts. Seriously, I hear very loudly what my noble friend says. Indeed, the Law Commission report, which has just come out and to which the Government will reply within 12 months, addresses the question of co-habitants. I see that the report at paragraph 8.52, which my noble friend may have seen, notes that concerns were raised about the use of the word “couple” in our provisional proposal in that it was too broad and ambiguous a term and might not be sufficiently precise to exclude, as we intended, those who share a home but do not have an intimate relationship. Indeed, this is not an area that is covered in the Law Commission’s work.

[Lord Campbell-Savours]

My Lords, does the Minister not accept that an inheritance can completely undermine incentives in recipient generations? Is that not an argument for increasing the take from inheritance taxes?

[Lord Sassoon]

My Lords, the Government keep all tax matters under review, but we have no plans, as I have said, to change the law on inheritance tax.

Independent Commission on Banking

Debate between Lord Campbell-Savours and Lord Sassoon

Monday 28th February 2011 Lords Chamber

[Lord Sassoon]

I see the clock is advancing because of the length of that question. I gave the answer I wanted to give.

[Lord Campbell-Savours]

Are not 90 per cent mortgages dangerous in conditions where the property market might decline by 20 per cent?

[Lord Sassoon]

My Lords, it is up to the banks to decide what products they offer. They have to do that within a set of rules that are set down by the regulators. It is not for me to comment on either the business model of an individual bank or the regulation and supervision of the regulators on this point.

Egypt: Mubarak Family Assets

Debate between Lord Campbell-Savours and Lord Sassoon

Wednesday 16th February 2011 Lords Chamber

[Lord Sassoon]

My Lords, there are a number of potential courses of action, but the principal one now is working with our EU partners, following a similar route to the one that was adopted in relation to Tunisia. My right honourable friend the Chancellor discussed the issue with his colleagues in the context of the ECOFIN meetings earlier this week. EU diplomats are discussing the issue this week and it will be on the agenda of the Foreign Affairs Council meeting on Monday 21 February. It could decide to request the Commission to draw up a regulation similar to the one that was drawn up on Tunisia, which would be enforceable in all EU member states.

[Lord Campbell-Savours]

The Minister referred to evidence of misuse of assets. Has any evidence of that nature been drawn to the Government’s attention?

[Lord Sassoon]

My Lords, it would be wholly wrong to discuss individual cases. Indeed, it is a matter for the police and the Serious Organised Crime Agency, because in parallel to what I have described as the EU route is the principal relevant UK legislation, the Proceeds of Crime Act 2002. Under that Act, it is for the police and SOCA to initiate as they see fit, and not for the Government to direct, any action on criminal activity that relates to proceeds of crime or money laundering.

Banking: Bonuses

Debate between Lord Campbell-Savours and Lord Sassoon

Tuesday 11th January 2011 Lords Chamber

[Lord Sassoon]

I am grateful to my noble friend Lord Hodgson and agree with his analysis. We need a successful and vibrant banking system in this country. We need healthy banks across the system, but it is particularly important for the taxpayer that the health of RBS and Lloyds is restored so that they can get a decent return in due course from its interest in those banks.

[Lord Campbell-Savours]

Is it not fair to say that bonuses based on share options could be quite remunerative?

[Lord Sassoon]

Indeed, bonuses based on a number of forms can be remunerative. It is now a fundamental part of the package agreed by G20 Ministers, incorporated in the European capital requirements directive in force from 1 January in the UK, that a significant part of bonuses now has to be paid in a non-cash form and cannot be cashed in for a considerable period. Absolutely, that needs to be part of the structure.

Autumn Forecast

Debate between Lord Campbell-Savours and Lord Sassoon

Monday 29th November 2010 Lords Chamber

[Lord Sassoon]

I, indeed, read some of the newspapers over the weekend with interest, but the forecasts have been handed over exactly in the way that the OBR suggested. My reading of the press was that they were making educated guesses because the forecasts of the OBR in respect of this year and next year have moved much in line with market forecasts. The press are always bound to speculate in contexts such as this one. Indeed, that is what they were doing.

[Lord Campbell-Savours]

My Lords, what did the noble Lord mean when he said “in principle” in regard to the question of the noble Lord, Lord Eatwell, which he did not answer?

[Lord Sassoon]

My Lords, forgive me but which of the questions of the noble Lord, Lord Eatwell, are we talking about?