HMRC: Building our Future Plan

Chris Law Excerpts

Thursday 28th April 2016 Commons Chamber

[Chris Law (Dundee West) (SNP)]

I thank my hon. Friend the Member for Glasgow South West (Chris Stephens) for bringing forward this debate. The issue of tax avoidance has obviously been highlighted in the House by the recent publicity over the Panama papers. It is beyond doubt that powerful individuals in the UK have been shamefully implicated in those documents. These people want to keep their offshore tax affairs a secret. Let us be quite clear: both rich individuals and organisations are using trusts and shell companies in places such as Panama and the British Virgin Islands for one purpose and one purpose only—they hide their financial assets from the tax authorities of the countries where they actually live and do business. It then becomes extremely difficult or, indeed, even impossible for tax collection agencies such as HMRC to collect accurate levels of tax on their wealth.

To be effective, HMRC requires the recruitment, training and retention of skilled and experienced tax professionals. They are the very people who make sure that the Government have enough money to pay for schools, hospitals and pensions. It is in this context that the current misguided reorganisation of HMRC needs to be understood.

Since the Government came to power in 2010, they have invested vastly greater resources in pursuing benefit fraud than in going after the real villains—those who funnel billions of pounds out of our country. Figures show that 10 times more Government inspectors are employed to investigate benefit misuse by the poorest in society than to deal with tax evasion by the wealthiest. The Public Accounts Committee report on tax fraud stated that a meagre 35 wealthy individuals are investigated for tax fraud each year. To put that in perspective, it is only slightly more than the number of Government Members who could be bothered to turn up in the Chamber today. HMRC does not even know how many of these individuals are actually prosecuted. We need to put that in the context of the fact that this country still presides over a tax gap of £34 billion, which we should move urgently to close.

I recently discovered that the ownership of the leases of HMRC offices—this has already been mentioned by my hon. Friend—was transferred to a company called Mapeley in 2001. You could not make this up, Mr Deputy Speaker. Where is Mapeley based? In the Bahamas. That is right: HMRC pays rent to a company registered in a tax haven. To quote the chairman of the Public Accounts Committee, this Government have scored a “massive own goal”. Who stands to profit from the sales of HMRC local offices? You guessed it: Mapeley again. Why not use local council offices that may be available, and then any profits from the rents would go straight to the Treasury?

The UK Government intend to close 137 local HMRC offices across the UK. Two of them, Sidlaw House and Caledonian House, are in my Dundee constituency, where almost 800 staff are employed. This is of course driven by the Government’s austerity obsession, which means that the budgets for Departments and public bodies have suffered swingeing cuts. The Chancellor boasts of having increased the funding for HMRC, but it does not even come close to restoring the cuts he made in 2010. At this moment, about half as many people work for HMRC as did in 2005.

I have spoken in this Chamber before about HMRC and have tabled a number of questions, only to receive evasive and unhelpful answers. Employees, some of whom have more than 30 years’ skill and experience—decades of loyal service—are being abandoned by an organisation to which they dedicated their whole careers. At Caledonian House in Dundee alone, there are 10 couples working under the same roof. Those 10 couples could see their entire income disappear overnight. The proposals are set to destroy families’ lives.

[Hannah Bardell (Livingston) (SNP)]

My hon. Friend is making a powerful speech. Offices in my constituency are going to be moved to Edinburgh, as are many others in West Lothian. I am sure he will share my concern that the number of redundancies in February was the biggest ever across the civil service, and that carers and people with disabilities are being disproportionately affected by those compulsory redundancies. We should be doing all we can to support them and stand up for their jobs.

[Chris Law]

I completely agree with my hon. Friend. At a time when this is still in consultation, the forced redundancies coming through are an absolute shame and embarrassment for all of us in this House.

Relocating HMRC to regional centres in Glasgow and Edinburgh will mean not only job losses in Dundee, but a loss of boots on the ground, and will diminish the capacity for public contact anywhere north. For example, Aberdeen has paid more than £300 billion from its oil resources into this Government, yet there is not going to be an HMRC office there, and the largest growing city in Europe, Inverness, will not have any representation —not to mention the rural areas in between. It is essential for HMRC to offer its clients access to skilled, trained staff based in the local area. Speaking from previous business experience, I know what a struggle it can be getting through to HMRC on the phone; what sort of business will we come to expect? I have to share a story I have heard just in the past 10 minutes: one of my colleagues has tried eight times to pay a bill that is due and still cannot get through.

No one in their right mind would argue that it would make sense to have just two huge hospitals in Scotland, one in Edinburgh and one in Glasgow. If the NHS can maintain internationally recognised standards of service in thousands of clinics and hospitals around the country, surely it is possible for HMRC to do the same in a network of fewer than 200 local offices.

To return to my earlier point, the Panama papers have dramatically drawn attention to a fact that has been emphasised over and over again in this House, by colleagues from all parties, namely that sufficient resources need to be dedicated to HMRC so that it can scrutinise sources of income to ensure that the tax due is paid. It is clear that to do this we need HMRC offices all over the UK, staffed by experienced tax officers with local knowledge. No one would ridicule the Government for making a U-turn on HMRC’s Building our Future plan.

HMRC has the potential to become a paradigm of self-sufficiency, a public service that pays for itself. That idea is certainly less far-fetched and counter-intuitive than the measures currently set to be put in place, which are designed to boost, yet again, the income of companies based in offshore tax havens.