Anti Avoidance

David Gauke Excerpts

Tuesday 22nd June 2010 Written Statements

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

The Chancellor of the Exchequer announced today as part of the Budget an increase in the standard rate of VAT to 20 % to take effect from 4 January 2011.

The Government have taken this step to contribute to tackling the deficit. To protect the public finances from artificial avoidance aimed at exploiting the change in VAT rate where there is no current economic activity, the Finance Bill 2010 will contain anti-forestalling legislation to ensure that the VAT rate change is fully effective.

Anti-forestalling legislation will apply from today to ensure that, in the circumstances specified, supplies with a basic time of supply after the VAT rate increase takes effect will be subject to the rate of VAT in force at that time. The provisions are designed to prevent artificial forestalling while not affecting genuine commercial transactions, and few businesses will need to operate them. The legislation is not intended to catch the normal commercial activity of providing goods and services.

The anti-forestalling legislation will apply from today, but any extra VAT arising from its operation will not become due at the earliest until the date of the VAT rate change. Until then, suppliers should continue to account for VAT as normal, applying the VAT rate at the time of the prepayment, VAT invoice issue or grant of the right or option.

Further guidance on the anti-forestalling legislation is available at www.hmrc.gov.uk. Copies of the guidance have been deposited in the Libraries of both Houses.

Double Taxation Agreement (United Kingdom and Hong Kong)

David Gauke Excerpts

Tuesday 22nd June 2010 Written Statements

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

A new Double Taxation Agreement with Hong Kong was signed on 21 June 2010. The text of the agreement has been deposited in the Libraries of both Houses and made available on HM Revenue and Customs’ website. The text will be scheduled to a draft Order in Council and laid before the House of Commons in due course.

Tax Avoidance

David Gauke Excerpts

Wednesday 16th June 2010 Westminster Hall

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

It is a great pleasure to serve under your chairmanship, Dr McCrea. Let me begin by endorsing your words with regard to the right hon. Member for East Ham (Mr Timms). It was a great privilege to shadow him for a number of years, and I look forward to his return. I know that he has a formidable intellect and is a fine parliamentarian, so he will be a very testing person to have as a shadow. He is also a very good man, and I wish him well. I endorse the words of the hon. Member for Wallasey (Ms Eagle).

I congratulate my hon. Friend the Member for Southport (Dr Pugh) on securing this debate and on his excellent contribution. He has the benefit and experience of serving on many Finance Bill Committees. The second excellent contribution was from my hon. Friend the Member for Amber Valley (Nigel Mills), who, I suspect, will serve on many Finance Bill Committees. He brought great expertise and considerable practical experience to the debate.

We had a thoughtful debate on some of the matters relating to the general anti-avoidance rule, and I shall say more on that during the course of my remarks. The quality of this debate has been extremely helpful, and I am very grateful to my hon. Friend the Member for Southport for highlighting this particular issue, and for giving me the opportunity to say a bit more about tax avoidance and the tax gap.

I am grateful to the hon. Lady for her kind remarks in respect of my position. I had the pleasure of shadowing her to some extent. I did not directly shadow her position, but we served on Finance Bills together. She has demonstrated today that she is as tenacious in her Opposition role as she was as a Minister, and I hope to be able to answer her questions.

The issue of the tax gap, which incorporates tax avoidance but does not consist solely of it, is important for the Government. As earlier speakers have mentioned, it has been brought into even sharper relief by the dreadful state of the public finances, which we have inherited from our predecessors. As the hon. Lady pointed out, there is a public mood for people to do the right thing and to play by the rules, and that includes paying the taxes that are due under the law. Those who do not do that have very little public sympathy. The hon. Lady said that she felt that the previous Government are being traduced and unfairly criticised over their record. Although I would be the first to point out the failings of the previous Government with regard to the public finances, there are elements of both HMRC and the previous Government that I want to address in a fair manner, and their record is not all bad.

We are grateful to HMRC for publishing, for the first time, tax gap figures across all of its regimes in December 2009. It was the right thing to do and we welcome that greater transparency of information. Tax gap figures for VAT have been published for some years, but this was the first time that figures for direct taxes had been published. As we have heard, HMRC estimated the UK tax gap to be around £40 billion in 2007-08. That figure is net of the amounts collected through HMRC’s compliance activity.

The tax gap is the result of several different factors, ranging from tax evasion and organised criminal attacks on the tax system through to errors made by customers. One of the largest factors contributing to the tax gap is avoidance. Tax avoidance is estimated to contribute around 17.5%—around £7 billion—of the total tax gap. It is worth making that point at the beginning because, although those contributing to this debate today have not fallen into this trap, there is sometimes a conflation between the tax gap, which is a considerable figure, and tax avoidance, which is still a considerable figure but is only part of the £40 billion figure. None the less, £7 billion is a substantial sum, and this Government are determined to reduce it as far as possible.

As our coalition programme for government says, we will make every effort to tackle tax avoidance, which will include considering the Liberal Democrat proposals. I hope that my hon. Friend the Member for Southport will forgive me, but with the Budget in six days’ time, I do not intend to pre-empt anything that my right hon. Friend the Chancellor may say on that day. My hon. Friend rightly says that my previous responses in this area have been more like holding answers, and perhaps they have, but I hope, given the proximity of the Budget, that he will understand why. For that reason, and that reason alone, I do not intend to wander down the path of capital gains tax, which he gently mentioned. I have no doubt that my hon. Friend will be paying attention to what the Chancellor has to say next Tuesday.

I will say a word or two about the general anti-avoidance rule, which was well debated by both my hon. Friends. They managed to tease out some of the issues as well as outline some of the questions that have to be asked. The hon. Lady talked about the balance between principles and something that is much more targeted. One of the questions that we must consider is whether it enables us to reduce targeted anti-avoidance rules. Do we know the answer to that until we know what the attitude of the courts is? That is clearly something that is worth exploring. Does it require a clearance regime in order to make it work? If it does—in some countries it does and in others it does not—what resources will be necessary? My hon. Friend mentioned HMRC resources in that area. In total, HMRC has something like 17,000 tax professionals. Not all of them work exclusively on tax avoidance matters, but many of them do. There is a question, therefore, over how resources are deployed.

[Nigel Mills]

If the Minister was minded to proceed down that line, a clearance mechanism would be essential to avoid creating huge uncertainty for taxpayers. Having had much experience of dealing with the clearance system, I can say that it would take huge amounts of resources to deal with the amount of clearances that we would get for a general anti-avoidance rule. Almost everybody would want to get that certainty. In any remotely complicated transaction, there would be some element of doubt in the situation. There is a real risk in the case of a purpose transaction. For example, someone may say, “My intention here is commercial and not to avoid tax.” They want HMRC to write back and say, “Yes, we agree.” However, they would have to give a lot of information to achieve that response. There is a risk that if the transaction changes slightly, the claim becomes invalid, or that a hugely long and detailed inquiry would be needed covering many aspects and many different taxes, and that would take a huge amount of time and a lot of resources to complete, which will discourage the transaction from taking place at all.

[Mr Gauke]

I am very grateful to my hon. Friend for that intervention. At this point, given that we will have a Budget next week, I will say that there are a number of issues here. The Government are not hostile to exploring these areas. The coalition agreement is very clear in saying that we want to look at the Liberal Democrat proposals, which included a general anti-avoidance rule. However, my hon. Friend is right to raise some of the complexities and difficulties that may exist and that may need to be overcome. That is a debate that I think the Government, across the board, welcome and want to take forward.

[Dr Pugh]

Again, we have a situation where a proposal is put forward and, as it were, speculative possibilities that could result from that proposal are alluded to. Presumably in any process of investigation, however, one looks at how things actually pan out in the real world in other places. Clearly, if it was the case that, in every regime where a proposal such as this one was introduced, there was this massive clearance backlog, rather like the Independent Parliamentary Standards Authority—heaven forbid—one would never implement such a scheme. In fact, there is no obvious reason why a scheme such as the one that IPSA has should be as complex and as poorly managed as it actually is.

[Mr Gauke]

Again, my hon. Friend makes a fair point. He manages to bring IPSA into the debate—

[Dr Pugh]

Sorry. [Laughter.]

[Mr Gauke]

That tends to be the way of things now, I understand. There is a need for a sensible debate in this area, and today we have heard two excellent contributions, from my hon. Friends the Members for Southport and for Amber Valley, and I for one am very grateful for those contributions.

The hon. Lady raised a number of points and I hope that, in the course of my remarks, I am able to address those points. As far as building on the previous work undertaken by the previous Government and by HMRC, the underlying point that I want to make is that this Government take tax avoidance very seriously. We want to use HMRC’s resources as effectively and as efficiently as possible to ensure that we address this particular matter and so that those who do the right thing and who pay the taxes that are due do not find themselves essentially subsidising those who have not paid their taxes properly. Again, further details will be announced in the Budget.

The hon. Lady raised the specific point about whether one should have a target for the number of prosecutions in this area, and so on. That is perhaps more symptomatic of how the previous Government tended to work, which was on the basis of having targets. However, in the number of meetings that I have had with HMRC officials in the five weeks or so that I have been in my post, I have said that we take tax avoidance seriously. We want to work with HMRC in developing proposals on how we tackle tax avoidance and on how we deploy resources most effectively.

That will continue to be the Government’s position, including on tackling matters such as the hidden economy, which the hon. Lady rightly raised as an important area, and on working on the international stage and engaging with other countries in finding ways to exchange information more effectively. The hon. Lady highlighted the Liechtenstein agreement and that is one agreement that we welcomed in opposition and that we continue to support. I am not in a position to say anything more about particular matters today, for reasons that I am sure she will understand, but we continue to encourage HMRC to engage with other tax authorities to ensure that those people who should be paying tax in this country do pay tax in this country.

The hon. Lady raised the issue of greater disclosure. We support that. She referred to the disclosure of tax avoidance schemes. We think that that was a very successful initiative by HMRC and we wish to continue with that initiative and build on it. We will continue to encourage HMRC to engage with other tax authorities on double taxation treaties and tax information exchange agreements. I have shadowed Ministers in Committees on many statutory instruments on this particular matter and frequently asked how much these agreements will actually raise for the Exchequer, so I know that the answer is that it is not possible to provide the answer. Nevertheless, these agreements apply for Belize as much as for any other jurisdiction and we will continue to encourage HMRC to pursue those agreements and to look to progress as many of them as possible as quickly as possible.

[Ms Eagle]

In general, does the Minister view the Liechtenstein agreement, which is new, as an interesting model, in that it goes further than the tax information exchange agreements? I am not asking him to declare today which country is going to be next. I am just trying to tease out from him what he thinks about that approach, which was quite groundbreaking. We know the history of it, but something extremely effective came out of it. Does he see that general approach as a model that ought to be promoted around the world, to ensure that we begin to clamp down on jurisdictions and tax havens where people can hide money that is illegitimately held and untaxed?

[Mr Gauke]

I would say that there is something there for us to build on, and I think that that probably answers that question as effectively as I can.

The hon. Lady highlighted the issue of country-by-country reporting. Our view is that we certainly want to do everything we can to help developing countries to improve their ability to collect tax. The OECD informal taskforce on tax and development is currently exploring with non-governmental organisations and with industry whether country-by-country reporting would be effective in improving tax transparency. We shall certainly consider this matter very carefully to see what is the most effective way of doing things.

There is also something that the previous Government achieved, which the hon. Lady did not particularly mention but for which I think they deserve some credit, in ensuring that the tax capacity of developing countries can be improved. Again, we are certainly very interested to see what we can do to explore that issue.

Let me turn to one of the key points, which I think was raised by my hon. Friend the Member for Amber Valley, which is the need to do what we can to improve tax law so as to remove uncertainty. That is a very important point. We are committed to reforming the tax system to make it competitive, simpler, greener and fairer, and to ensuring that the quality of tax law is improved. The most effective way to tackle avoidance is, as far as possible, to stop it at source, rather than tackling it once it has happened. Prevention is better than cure.

A simpler tax system that presents fewer boundaries and complexities to be exploited is clearly preferable. As a Government, we are committed to making sure that, when we consider reforms to tax policy, we take into account from the start the impact on avoidance opportunities. We want a tax system that is noted for fairness and simplicity, and addressing tax avoidance risks is a key part of that.

Nevertheless, it is widely acknowledged, including by the Institute for Fiscal Studies, that tax avoidance requires a multifaceted response. There will always be taxpayers who attempt to achieve tax savings that were not intended by Parliament. We intend to be a reforming Government that put in place a better tax framework for business. As we do that, we will take the opportunity to construct a tax framework that reduces the risk of tax avoidance.

Of course, those are the longer-term objectives. In the short term, we will need to introduce specific targeted measures when an avoidance risk is identified. We will take that kind of action when it is justified, but our aim over time is, as far as possible, to move away from the need for short-term measures.

HMRC has published an anti-avoidance strategy that recognises that a range of responses is required. The strategy has three key elements: first, prevention; secondly, detection, and finally counteraction. Prevention focuses on developing robust law. HMRC clearly has a key role in recommending to Ministers changes to strengthen the legislative framework to defeat attempts at tax avoidance.

Another tool in preventing avoidance is deterrence. HMRC publicises details of avoidance schemes that it considers ineffective, to put taxpayers on notice that it will challenge their use of those schemes. For large businesses and the wealthiest individuals, HMRC uses real-time dialogue to obtain early information about transactions under consideration and influence behaviour. To be fair, progress has been made in recent years, and we welcome that. The regime for the disclosure of tax avoidance schemes, in particular, has proved invaluable to obtaining real-time intelligence on avoidance activity, as I acknowledged earlier.

Where HMRC detects avoidance, counteraction involves thorough and expert investigation and, where necessary, litigation. We believe that that range of responses strikes the right balance between providing certainty to taxpayers in their tax affairs and protecting the Exchequer against unacceptable threats to tax revenues. It also maintains flexibility so that the Government can respond quickly and in a targeted way where necessary. We also want to consider longer-term solutions to the problems of tax avoidance, and I hope that I will have all parties’ support as we do so.

[Dr Pugh]

The Minister has mapped out a strategy that we can all understand and appreciate. However, it would be helpful to know whether he has assessed the personnel requirements to fulfil that strategy. Are the staff currently in place in the Treasury, or will he need to acquire more? I ask because we are, obviously, in a time of head count reduction, and we do not want to remove the heads that are most useful in collecting tax revenues.

[Mr Gauke]

I am grateful for that intervention. My hon. Friend raises a perfectly fair point. Because of the crisis in the public finances, all parts of Government face great pressure to find savings. As we prepare for the spending review in the autumn, I have said to HMRC that I want it to focus resources on reducing the tax gap and achieving yield. I hope that during the months ahead, we can develop a strategy to ensure that HMRC has the resources that it needs in the right places to do so. Guaranteeing a certain yield or making estimates about a particular area of expenditure or the expansion of staff in a certain Department is not easy.

The hon. Lady acknowledged that there will always be a tax gap. To respond to her remarks, one can go only so far in making firm predictions about the tax gap reduction, as we must be sufficiently confident that any predictions will withstand the scrutiny of the Office for Budget Responsibility. However, that is not to say that I as a Minister am not keen to see what we can do to reduce the tax gap.

My hon. Friend mentioned the £120 billion estimate, although he did not necessarily say that he thought it was right. It is mentioned frequently among hon. Members and in the media. That figure was produced by the Tax Justice Network, or Tax Research LLP, which is essentially the same organisation. It is a striking figure, and is often repeated. It is very different from the £40 billion estimated by HMRC. The £120 billion figure has clearly focused attention on the matter, and that is no bad thing, but scepticism about it is widespread; indeed, I expressed some scepticism myself from the Opposition Benches a year or so ago. Given the disparity between the £120 billion and HMRC’s numbers, I have asked officials to review it.

It must be accepted that in preparing estimates, organisations external to Government have access to much less data than HMRC. The types of methodology available to them are therefore restricted. It is reasonable to assume that HMRC is clearly in a better position to make an assessment, but there is no reason why outside bodies should not contribute to the debate. However, having considered the methodology used to produce the figure of £120 billion, I must tell the House that even a brief analysis reveals that it is deeply and systematically flawed.

For example, Tax Research LLP estimates total revenue lost due to tax evasion at £70 billion. That figure is obtained by applying the percentage tax gap from VAT to direct taxes. There are two main problems with that. First, different tax regimes have different tax gaps. According to independent research by the OECD, for example, the operational experience shows that tax regimes such as pay-as-you-earn that withhold tax at source have far smaller tax gaps than other types. To apply the VAT gap percentage to taxes collected by PAYE or otherwise at source greatly overstates the tax gap, because the VAT tax gap is considerably higher.

Secondly, an element of double counting is involved, although, to be fair, that might not be apparent from the numbers used by Tax Research. The VAT gap already includes amounts due to tax avoidance and tax debt. Applying that percentage to direct taxes and then adding additional amounts for both avoidance and tax debt, as does Tax Research, results in the double counting of losses from the avoidance of direct taxes and non-payment.

The Tax Research estimate of tax debt is £28 billion. That is a snapshot figure of all tax owed to HMRC on 31 March 2009, which does not represent the actual losses to the Exchequer from non-payment. Almost all tax owed to HMRC is eventually paid, sometimes within days of becoming due. A proportion of debts outstanding are in staged repayment plans, such as those covered by the business payment support service. Only the tax debt written off as uncollectable by HMRC is an actual loss to the Exchequer from debt. That is therefore the amount that HMRC uses in its estimate of the tax gap, which in the 2007-08 tax gap figures was not £28 billion but £3 billion. Of course, we must take steps to reduce that figure further, and I am keen to encourage measures to do so, but we should get the number right.

The final and most significant point concerns tax loss due to tax avoidance, which Tax Research estimates at £25 billion. That estimate includes the use of legitimate reliefs promoted by the Government to encourage certain activities, such as capital allowances to encourage investment and research and development tax credits to encourage innovation. Tax avoidance is generally regarded as the use of legal structures and allowances to reduce tax bills in manners not intended by Parliament when enacting the legislation. It is simply nonsense to categorise as tax avoidance the use of allowances for purposes intended by Parliament.

If I have been unfair in setting out those points, I am sure that Tax Research will correct me, but that appears to be the methodology used. Furthermore, the Tax Research estimate does not provide HMRC with any credit for the significant amount of tax that it recovers by challenging avoidance schemes. The figure of £25 billion therefore seems somewhat wide of the mark.

I thank my hon. Friend for this debate. This Government take tax avoidance seriously. We must take every possible step to minimise tax avoidance. We cannot afford to let it undermine our efforts to reduce the deficit, and it is not fair that by deliberately creating schemes that avoid tax, some people pay less while the vast majority of the hard-working public pay their fair share. Action against tax avoidance will be a priority, alongside improving the tax law-making process, introducing robust legislation and targeting HMRC counteraction and investigation.

Oral Answers to Questions

David Gauke Excerpts

Tuesday 8th June 2010 Commons Chamber

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

The Government are taking action to support enterprise and create a fair, competitive and efficient tax system to deliver the private sector-led recovery that will be the foundation of future growth. Fundamental to this strategy will be tackling the budget deficit and providing a stable macro-economic environment that will underpin private sector investment and growth. Further details of the action that the Government will take to secure future growth will be included in the emergency Budget on 22 June.

[Peter Bottomley]

We agree that investment, enterprise and modest tax rates will help the economy grow out of the inherited mess. In addition to the academic work of Arthur Laffer and Sir James Mirrlees, will my hon. Friend hold in mind the situation of an elderly lone mother who may have put money aside to buy a house, and after decades may wish to sell it, without too high a capital gains tax bill?

[Mr Gauke]

Obviously, this Government will want to encourage hard work and enterprise, just as the Government in which my hon. Friend served with much distinction in the 1980s did. As for specific tax measures, I am sure that my hon. Friend will understand that with only a fortnight until the Budget, I do not intend to make any specific comments. None the less, I am grateful for his remarks.

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

I congratulate the hon. Gentleman on his elevation to his post. I also take the opportunity to thank the Chancellor of the Exchequer for taking time out during the general election to come and support my re-election in Harrow West. The Opposition recognise that the new politics is not designed to help Labour Members, but I am grateful for the little bit of Tory love that came my way.

Can the hon. Gentleman tell the House who in the Government will have the final say on whether and which regional development agencies will survive? Will it be the Business Secretary—once a supporter of RDAs—or will it be the Chancellor? No one expects it to be the Chief Secretary. Is not the real truth that RDAs such as One NorthEast are playing, and could continue to play, a key role in helping to deliver new jobs in new industries crucial to Britain’s economic future, such as renewable energy and advanced engineering?

[Mr Speaker]

One answer will do.

[Mr Gauke]

I thank the hon. Gentleman for his kind words. I should congratulate him on being re-elected on this occasion, but I also note that my hon. Friend the Member for Harrow East (Bob Blackman) is here, which is a bit of a triumph for us. On the hon. Gentleman’s specific points, the decision will be made collectively. The Government will work in a cohesive manner in making those decisions.

[Margot James (Stourbridge) (Con)]

When I was in business, it was the oldest trick in the book for managers to come in with hopelessly optimistic growth estimates. Does the Minister think that that was endemic in the last Administration, and has he greater confidence, now that we have the impending Office for Budget Responsibility, that it will not be the case with our Administration so that, for the first time in many years, we will have realistic growth estimates?

[Mr Gauke]

It is clearly very important that we have credible growth projections. We look forward to hearing the projections from the Office for Budget Responsibility. As for the previous Government’s record, time will tell.

[Derek Twigg (Halton) (Lab)]

Transport infrastructure is of course important for economic growth, and as the hon. Gentleman’s right hon. Friend the Chancellor will know, as a Cheshire MP, there is a very important project, the Mersey Gateway project, which is crucial to the economic regeneration of Cheshire and Merseyside. Will that be excluded from the proposed cuts that his Government are making?

[Mr Gauke]

The Government will make a decision on all matters considering the value for money and considering the very difficult financial circumstances that we find ourselves in, bequeathed by the previous Government.

[Dr Julian Lewis (New Forest East) (Con)]

7. What steps his Department is taking in respect of payment of compensation to Equitable Life policyholders.

[Neil Parish (Tiverton and Honiton) (Con)]

15. What steps his Department is taking in respect of payment of compensation to Equitable Life policyholders.

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

The coalition Government have pledged to make fair and transparent payment to Equitable Life policyholders, through an independently designed payment scheme, for their relative loss as a result of regulatory failure. The Queen’s Speech announced the Government’s intention to introduce a Bill in the first Session of Parliament to enable payments to be made to Equitable Life policyholders. On the same day, the Government also announced that an independent commission would be established to design the payment scheme. These steps are a strong sign of the Government’s commitment to deliver on their pledge.

[Dr Lewis]

More than 60 of my constituents in New Forest East, and indeed even one of my own relatives, will be delighted to know that the Government intend to implement the recommendations of the ombudsman. Can he tell me when this is going to happen—and can he guarantee that the Independent Parliamentary Standards Authority will not be put in charge of making the payments?

[Mr Gauke]

I thank my hon. Friend for his question. The intention is that Sir John Chadwick’s report will reach its conclusion in mid-July; at the same time the independent commission will be established. We are making progress in this area—in contrast, I am afraid, to the dither and delay of our predecessors.

[John Howell]

I am grateful to my hon. Friend for his previous answer, but he will be aware that many of us have had to put in place our own means of keeping constituents who have got caught up in Equitable informed of what is happening, so poor has been the Government communication programme. So will he say a little more about his plans to keep that group of people informed as the payment scheme goes through?

[Mr Gauke]

I suspect that one of the reasons why the previous Government were so poor in communicating progress was that there was very little progress to communicate. As I mentioned earlier, we are keen to ensure that there will be progress, that we have the independent commission in July, and that we will have the conclusions of Sir John Chadwick’s report; we intend to make progress there. I hope that we will have more information to give my hon. Friend in mid-July. This is a matter that has caused enormous anxiety for many people, and it is right that we keep people up to date with exactly what progress we are making.

[Neil Parish]

I would like to follow up those questions on Equitable Life. Over 1 million policyholders were affected by the fact that the previous Government did not accept the ombudsman’s proposal that they be compensated. I am particularly worried that many people have died during the whole process; the previous Government was rather cynical in that respect. May I be assured that, through this process, we will ensure that people are compensated quickly? That needs to be done.

[Mr Gauke]

We are keen for the independent commission to design the scheme, but one of the points that we have made clear is that the dependants of deceased policyholders should be included in the scheme to address that point. Clearly, however, my hon. Friend highlights the need to move quickly, after 10 years of inadequate progress.

[Michael Connarty (Linlithgow and East Falkirk) (Lab)]

On the question of Equitable Life, there can be few constituencies that do not contain people who are waiting for payment or people who have died while waiting for payment. Is it not shocking that one of the main perpetrators of the Equitable Life fraud—for that is what it was—will, after last weekend, be able to take up a senior position in a financial institution? Can the Government re-examine what happened in that process, so that these people are not allowed to have senior financial positions in future?

[Mr Gauke]

I hope that the hon. Gentleman will understand that I am not going to be drawn on an individual case without all the information in front of me. He has made his point very clear.

[Mr Lindsay Hoyle (Chorley) (Lab)]

First, would the Minister care to share with the House the date that the cheques will arrive through the doors of those who are still waiting for payment? That is the key. My second question is, as people have, tragically, died while the process has gone on and on, will there be compensation for the families that have missed out as well?

[Mr Gauke]

I fully understand the hon. Gentleman’s concern about delays. He knows as well as I do where a lot of the blame for that lies. I made the point earlier that dependants of deceased policyholders should be included in the scheme. As for a specific date, the only thing I can say is that we are clearly making much more progress than the previous Government did.

[Dr William McCrea (South Antrim) (DUP)]

Bearing in mind the fact that many of the policyholders are getting older—[Interruption]—surely it is vital that we get money into their hands as quickly as possible.

[Mr Gauke]

I do not want to be pedantic, but all of them are getting older. The hon. Gentleman rightly says that there is a need to move quickly. I think that we all feel that. I am pleased that the Government have already announced in the Queen’s Speech that there will be a Bill on this subject. We have already announced a date for the establishment of the scheme. We are making progress. That is a very welcome change from what we have seen in the previous 10 years.

[Ann McKechin (Glasgow North) (Lab)]

8. What recent discussions he has had with the Secretary of State for Work and Pensions on the future of Government targets to eradicate child poverty; and if he will make a statement.

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[Mr Adrian Sanders (Torbay) (LD)]

16. What steps his Department is taking to reduce the level of tax avoidance.

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

Tackling tax avoidance is essential, and we will make every effort to do so. We are committed to preventing avoidance through deterrence, and by ensuring that we have a robust legislative framework. We detect avoidance early using the disclosure of tax avoidance schemes rules and other information. We tackle avoidance quickly where we find it by strengthening legislation or through the operational work of Her Majesty’s Revenue and Customs.

[Mr Sanders]

Recent research has shown that up to £120 billion a year is lost to tax avoidance. Will the Minister ensure that he looks at the way in which HMRC works, and does better so that people will not have to pay higher taxes and receive poorer services as a consequence?

[Mr Gauke]

I am grateful to the hon. Gentleman for his question. We would disagree with the number, as the tax gap estimate produced by HMRC is £40 billion. None the less, that is a significant sum, and it is absolutely right that people pay the tax that is due, and HMRC will continue to pursue matters to reduce tax avoidance.

[Kate Green (Stretford and Urmston) (Lab)]

Is not the general view correct, and the estimated tax gap of £40 billion a significant underestimate? Will the Minister explain how cuts to HMRC staffing and capacity are to be aligned with attempts to close the tax gap?

[Mr Gauke]

Staff in HMRC have been reduced for many years, from 97,000 to 69,000. Any Government will want to ensure that HMRC’s resources are deployed as effectively and efficiently as possible, and we will certainly seek to do so.

[Simon Kirby (Brighton, Kemptown) (Con)]

17. What his policy is on taxation of the bingo industry; and if he will make a statement.

--- Later in debate ---

[Mr Mark Williams (Ceredigion) (LD)]

T4. There was great relief in the tourism sector when the furnished holiday lettings rules were scrapped just before the election in the wash-up. What will the Government do to ensure that the rules are EU compliant, but do not disadvantage tourist operatives in the way that it was feared that the old rules would do?

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

My hon. Friend raises a very good point, and what was proposed on the furnished holiday lettings rule would have caused great difficulties. There is an issue with the EU law, but I can assure him that we are working hard on the matter and we hope to be able to say more in the next few weeks.

[Alun Michael (Cardiff South and Penarth) (Lab/Co-op)]

T8. The Chancellor will be aware of the public and cross-party support given to the proposal to turn British Waterways into a sort of national trust for the waterways of the UK. That was given official endorsement in the last Budget. Can the Chancellor confirm his intention to pursue this proposal, and perhaps give an idea of the time scale within which it might be brought about?

Convention on Mutual Administrative Assistance in Tax Matters

David Gauke Excerpts

Monday 7th June 2010 Written Statements

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

The United Kingdom signed an amending protocol to the joint Council of Europe/OECD Convention on Mutual Administrative Assistance in Tax Matters on 27 May 2010. The text of the convention and of the protocol is published on the websites of both organisations. A copy of the amending protocol has also been placed in the Libraries of both Houses. Draft legislation incorporating the provisions of the protocol into domestic law will be laid before the House of Commons for approval in due course.