Taxation: Avoidance

Lord Richard Excerpts

Wednesday 6th February 2013 Lords Chamber

[Lord Deighton]

I thank my noble friend for giving me the chance to shed further light on this issue. HMRC is extremely clear that circular schemes which are designed to exploit gift aid do not work in tax law. It will challenge and litigate enthusiastically against any scheme that it believes does not work in tax law. As the schemes do not work in tax law, the anti-avoidance provisions are not necessary and the schemes should fall at the first hurdle of not being legally acceptable. However, I can confirm that it is the Government’s intention to include the general anti-avoidance rules as part of the Finance Bill 2013.

[Lord Richard]

My Lords, does the Minister agree that it is a principle of English law that that which is not forbidden is permitted? Do not the Government recognise that merely to go on bleating from the sidelines and telling people that they should not avoid tax will have absolutely no effect whatever? Clever lawyers will be able to devise ways of continuing to avoid tax. If the Government want to deal with tax avoidance, they will have to legislate to deal with tax avoidance and stop preaching from the sidelines.

[Lord Deighton]

The Government are prepared to legislate against tax avoidance in the area of charities law. In both 2004 and 2010, Governments legislated to do precisely that. I see this as two distinct areas. On the one hand, we need to create a tax regime which encourages an enterprise economy and giving to charity. On the other hand, the quid pro quo for that kind of positive environment is that people pay their taxes. I can assure the House that HMRC will pursue diligently those who seek to avoid tax.