Oral Answers to Questions

David Gauke Excerpts

Tuesday 29th January 2013 Commons Chamber

[Charlie Elphicke (Dover) (Con)]

9. What plans he has to tackle corporate tax avoidance and to close the tax gap.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

Over this Parliament, we have introduced 31 measures to tackle tax avoidance, including loophole closures. This year, our work will focus on strengthening the disclosure regime, consulting on new sanctions for avoidance promoters and introducing the general anti-abuse rule. HMRC will also increase its risk assessment and specialist transfer pricing resources to target multinationals. Combined, those measures will strengthen our commitment to tackling tax avoidance and reducing the tax gap associated with it.

[Jeremy Lefroy]

I thank the Minister for that answer. How will the Government use the presidency of the G8 this year to tackle international tax loopholes that have an effect on receipts to the UK Treasury?

[Mr Gauke]

My hon. Friend is right to raise that point. The Prime Minister has said that he wants to use the G8 for this purpose and to have a serious debate about tax avoidance. The OECD is looking at this matter. We are encouraging it to do so and have provided it with additional resources. It will report back on solutions that could be developed to tackle profit-shifting by multinationals and the erosion of the corporate tax base.

[Charlie Elphicke]

May I say how welcome it is that the UK is using the presidency of the G8 to tackle international tax avoidance, after a decade in which the Government of this country stood by while industrial tax avoidance was allowed to run rampant? I urge the Government to focus on the issue of tax presence, particularly for companies such as Amazon, which we all know are in this country and should be paying tax in this country, but are playing the rules to avoid it.

[Mr Gauke]

I will not get into individual cases. As I have said, the OECD, at the urging of my right hon. Friend the Chancellor, is looking at these issues. We want to ensure that there is an international tax system whereby economic activity is taxed where it occurs. That has been overlooked for too long and we are determined to address it.

[John Mann (Bassetlaw) (Lab)]

Will the Minister join me in calling on all political parties in this country to refuse or return any donations from tax avoiders?

[Mr Gauke]

I think perhaps the hon. Gentleman might want to have a word with those on the Opposition Front Bench before he ventures into that territory.

[Clive Efford (Eltham) (Lab)]

Will the Minister say why there are fewer people in the offshore investigation and affluence investigation units in Her Majesty’s Revenue and Customs than there are working on cutting child benefit for families?

[Mr Gauke]

I should point out that those units were not in existence under the previous Government and were introduced as a consequence of our reinvestment programme. On enforcement and compliance more generally, I also point out that if we are looking only at numbers, under the previous Government the number of people working in HMRC’s enforcement and compliance department fell by 10,000. Under this Government it will increase by 2,500.

[Mr Nick Gibb (Bognor Regis and Littlehampton) (Con)]

The managing partner of Ernst & Young has dismissed the concerns of the House about aggressive tax avoidance by stating:

“The simplest solution is to stop banging on about morality and change the law.”

Does the Minister share my view that in a civilised society we do not live by rules and regulations alone, but by what we consider to be right? Should not boards of companies that operate in this country be asking themselves a key question about all their activities, including their tax policy: is this the right thing to do?

[Mr Gauke]

Increasingly, artificial contrived behaviour is something that all of us, including the public, simply do not accept. My hon. Friend is right to say that this is a board matter, and boards should take tax policy seriously. Companies should think very seriously about aggressive, artificial, contrived behaviour and there is low tolerance for such behaviour.

[Kevin Brennan (Cardiff West) (Lab)]

Did the Minister see the footage that recently came to light of the Chancellor of the Exchequer, then in opposition, appearing on the “Daily Politics” programme and advising the public about how to take advantage of tax loopholes?

[Mr Gauke]

This Chancellor has done more to tackle tax avoidance than any of his predecessors, and this Government have taken tax compliance much more seriously. I will give one more statistic: when we took office the yield from HMRC’s enforcement and compliance activity was £13 billion. We expect that number to have increased to £22 billion by the end of this Parliament. We are taking real steps to address this matter.

[Dr Julian Huppert (Cambridge) (LD)]

10. How much VAT was paid by (a) sixth-form colleges and (b) further education colleges in 2012.

--- Later in debate ---

[Priti Patel (Witham) (Con)]

15. What plans he has to simplify the tax system.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

The Government are committed to simplifying the tax system. Since 2010, we have set up the Office of Tax Simplification and have acted on a range of its recommendations. The Government are improving tax administration for small businesses and, from April 2013, will introduce a new cash basis for calculating tax, benefiting up to 3 million small self-employed businesses.

[Priti Patel]

Does my hon. Friend agree that the most effective way to simplify the tax system and to maximise tax yield is to reduce the burden of taxes through lower taxes?

[Mr Gauke]

It would be right to say that the Government have taken 2.2 million people out of income tax—that is certainly a simplification for them. We have reduced the small profits rate of corporation tax and reduced the main rate of corporation tax. We have taken steps, wherever possible, to reduce taxes.

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

Can the Minister reassure the House that these attempts at tax simplification will be more successful than last year’s attempts, which saw U-turns on caravans, pasties, charities and the oil and gas sectors? Can he reassure the House that these attempts will work a lot better this year?

[Mr Gauke]

I can remember one particular tax simplification from the last Government, which was the abolition of the 10p rate. I think we have a better record than that.

[Mark Pritchard (The Wrekin) (Con)]

Following on from my hon. Friend the Member for Witham (Priti Patel), who made her case well, given that the Exchequer benefited from the courageous decision to reduce the top rate of tax from 50p to 45p, may I encourage the Chancellor to go even further in the Budget and reduce the top rate of tax to 40p, in order to see more funds come into the Exchequer?

[Mr Gauke]

I will take that as a Budget representation. The point is that the 50p rate was not effective in raising revenue—my hon. Friend is absolutely right to make that point—and it was damaging to our competitiveness. There are better ways in which we can get more money from the wealthiest, and that is exactly what this Government have done.

[Sheila Gilmore (Edinburgh East) (Lab)]

Perhaps the Minister could explain how the changes in child benefit have simplified the tax process in this country.

[Mr Gauke]

A moment or so ago we heard lots of shouting about the 50p rate, yet the Labour party is the first to defend the idea that those very people should continue to receive benefits. Ensuring that child benefit is targeted best meant either looking at this on a household basis—which would have meant putting 8 million households into the tax credit system—or adopting the approach that we have chosen, but the Labour party is always there, ready to spend taxpayers’ money where—

[Mr Speaker]

Order. We are obliged to the Minister, but we will move on to one more question.

--- Later in debate ---

[Penny Mordaunt (Portsmouth North) (Con)]

The Minister may be aware of the report on football governance which was published today by the Culture, Media and Sport Committee. I want to record my thanks to him and to Her Majesty’s Revenue and Customs for their help in dealing with Portsmouth football club. Will he assure us that his Department will play its full part in ensuring that prospective owners who are not fit and proper do not get their mitts on these important community assets and destroy them?

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

The Government will, of course, look closely at the Committee recommendations. As my hon. Friend the Minister of State, Department for Culture, Media and Sport has made clear, it is time for football to get its house in order.

[Mr David Anderson (Blaydon) (Lab)]

The Chancellor is well known for trying to help us Back Benchers to do our job. Would he be so kind as to place in the Library the criteria that he uses to define whether or not the economy is in the danger zone, and will he tell us whether it is in the danger zone today?