United Kingdom Corporate and Individual Tax and Financial Transparency Bill

David Nuttall Excerpts

Friday 6th September 2013 Commons Chamber

[Mr Meacher]

I was not in any way referring to you, Mr Deputy Speaker; I was saying that the regulations and procedures of the House need to be examined in a way that prevents an abuse of that kind.

[Mr David Nuttall (Bury North) (Con)]

Will the right hon. Gentleman give way?

[Mr Meacher]

No, I am not going to give way.

[Mr Meacher]

I am entirely of the same mind, Mr Deputy Speaker.

Tax avoidance and financial transparency, or perhaps I should say the lack of financial transparency, have of course been high on the Government agenda for the past two years. They even led Prime Minister to make tax transparency and trade his central international focus at the G8 at Lough Erne in June. However, having marched his troops up the hill, rather like the Grand Old Duke of York, the Prime Minister has since proceeded to march them down again. Rather little of significance—that is being generous—has happened on the tax and transparency front since then.

At the G8, the UK published an action plan on tackling some of the issues involved, but it is not unfair to say that it was decidedly modest in its ambition. The same can certainly be said of the scope of the subsequently announced consultation on disclosing the beneficial ownership of companies. The Government have, of course, published the general anti-abuse rule, but as has often been said, it will cover only the most egregious forms of tax abuse and is consequently in danger of appearing to legitimise lesser forms. The GAAR is rather like the lobbying Bill that is currently before the House—the Government are extremely keen to be seen to be doing something, but they have no intention whatever of actually doing much. If we are really serious about tackling tax avoidance and the financial opacity of our tax system, a more robust approach is needed. That is what my Bill is intended to offer.

The Bill was drafted by Richard Murphy, who is the founder and director of Tax Research UK and, I think everyone will agree, one of this country’s foremost tax accountants. I am extremely grateful to him, as I believe the whole House should be.

There are two drivers behind the Bill. One is the demand for fairness and social justice. The country is in the middle of a deep economic recession caused by the bankers, yet the Government have imposed on the victims the liability for meeting the ensuing very high national debt and budget deficit.

[Mr Nuttall]

Will the right hon. Gentleman give way?

[Mr Meacher]

No, I am not going to give way. The hon. Gentleman was one of those who engaged in the filibuster, and I am not giving him any more time.

By and large, those victims are the poorer and poorest households, which bear no responsibility whatever for the crash five years ago. According to the Sunday Times rich list, the wealthiest 1,000 persons in the UK—just 0.003% of the adult population—have increased their gains by a staggering £190 billion since the crash. Most of that has now been squirreled away in tax havens, hidden behind nominee shareholdings or secreted in opaque trusts. Frankly, that is utterly intolerable. It is high time that the very richest people in this country made a fair contribution to resolving the financial crisis. The Bill would help them to do so.

The second driver behind the Bill is sheer, plain, down-to-earth, honest-to-God common sense, if I can put it like that. My right hon. Friend the Member for Edinburgh South West (Mr Darling), the last Labour Chancellor, reduced the budget deficit by about a third by the end of 2010 through his stimulatory measures, but it has now been stuck at about £120 billion after flatlining for most of the past three years.

The current Chancellor has, through his enormous expenditure and benefits cuts, persistently squeezed virtually every last drop of demand out of the economy. That is a counter-intuitive and self-destructive policy if ever there was one, because it has plainly not reduced the deficit, but extended austerity indefinitely. A policy that will reduce the deficit significantly is patently needed. The obvious way to do that is to take public sector-driven stimulatory measures to kick-start real growth, but as the Chancellor has a fetish for cutting and is adamantly opposed to giving the public sector any role in promoting growth, I submit that my Bill is the next best option.

First, following the revelations of which we have heard repeatedly in the past few months of colossal tax scams perpetrated by US multinationals Starbucks, Apple, Facebook and Amazon—I recognise that those scams are more or less exactly the same as those perpetrated by a great many UK multinationals—the Bill proposes that the tax details and implied tax liabilities of both the wealthiest individuals and the biggest corporations are made public, and that the beneficial owners of companies who hide behind nominee shareholdings are also made known. That has repeatedly been discussed but never done. My Bill proposes that it should now happen. The tax enforcement that will result from what is revealed will raise tens of billions of pounds for the Exchequer and significantly deplete the deficit and interest payments on the debt. Therefore, the Bill tackles the extreme opacity in the tax affairs of both the largest companies and the wealthiest individuals in the UK by requiring that the tax returns of the top 250 in each group are put on public record.

Four criteria are used to define the 250 largest companies, starting with the FTSE 100. The Bill will ensure that other companies with substantial sales, profits and numbers of employees are also required to disclose. As a result of my Bill, companies that seek to avoid UK corporation tax but that still have a significant undertaking in this country will, for the first time, be required to disclose the full range of their tax dispositions. On individuals of highest net worth—to use the commonly used phrase—the Bill will reveal how income is commonly shifted into capital gains, and in turn reduced by allowances and relief. In respect of both companies and individuals, the data will enable the tax abuse that, according to Her Majesty’s Revenue and Customs and Treasury data, costs this country at least £35 billion a year, to be effectively addressed for the first time.

Secondly, multinational corporations have, as hon. Members know, hidden their activities behind complex and often secret corporate networks that conceal their tax liability—the networks are set up to do that—especially if a subsidiary is incorporated in a tax haven. The Bill requires any multinational corporation to publish the accounts of all its subsidiaries on public record.

Thirdly, the Bill requires that companies identify their beneficial owners and pass the details to Companies House. That is important because the registered legal owners can easily disguise who is behind a company, and thus present an entirely false view of its structure. For example, many quoted companies list only some of their shares on the stock exchange; the rest are in beneficial ownership. Limited liability partnerships are widely used for tax abuse, because members of an LLP are taxed, but not the partnership itself. If the details of ownership are known and put on the public record, the tax liabilities can be correctly assessed. Unlimited companies are almost routinely inserted into major corporation group structures in order to disguise ownership or control, often in ways that are designed to mislead about the true nature of transactions being undertaken. Obviously, foreign branches must be included if an enormous loophole is not to be created in the disclosure of beneficial ownership.

I would be the first to recognise that to presume that a company bent on tax avoidance or other dishonest purposes will necessarily comply with its obligation to disclose its beneficial owners is, frankly, naive. The Bill would therefore also place a new obligation on UK banks to report the information they collect on their limited company clients under money-laundering regulations, including the real trading address of a company, who its directors and beneficial owners really are, and where they are located. The banks would be required to submit that information to Companies House, which would then be required to publish it. The banks would also have to supply the information to HMRC, which would then be required to demand a tax return from any company with a bank account.

The sanctions—and sanctions are the only thing that will make the legislation work—for failing to supply any information demanded from the company by Companies House or HMRC would be either the removal of limited liability status or making directors and beneficial owners liable for the debts. Under the Bill’s provisions, HMRC would also be granted the power to access the company’s bank account data, so that estimated tax assessments could be raised if the company refused to supply accounts. Again, the directors and beneficial owners would be held responsible and would have to pay the consequential tax.

In order to avoid an obvious loophole, the requirement for a company to have information on its beneficial ownership and its accounts on public record—on its own website, or wherever—would be extended to the tax havens in Britain’s Crown dependencies and overseas territories, although of course only if the company in question had a beneficial owner outside that territory.

Finally, the Bill deals with the question of trusts and would require that they, too, declare the true identity of their settler, the trustees and beneficiaries to HMRC. If they do not, the sanction would be that the trust property would pass to the Crown. Trust data will also be placed on public record, but only in the case of those with significant assets or income, and those that control companies—I am not worried about trusts that are relatively trivial in their economic impact. Those measures are necessary to enforce the requirements. The information has always been available to the Government, but under both parties there has been an unwillingness to use the measures that are patently available to ensure that tax is paid in accordance with what Parliament has determined.

It is no exaggeration to say that the effect of these measures on the UK system’s capability would be nothing less than transformational. We have repeatedly been shocked by multinational corporations and their armies of City lawyers and accountants regularly running rings around the UK tax authorities—sometimes, one might think, with the apparent complicity of Government—but that is not inevitable or irreversible. My Bill will redress a massive injustice in tax burdens, put a stop to enormous tax abuse by large companies which has persisted for far too long and make a huge contribution to reducing the budget deficit. I commend it to the House.

--- Later in debate ---

[Jacob Rees-Mogg]

Once again, I do not agree with the right hon. Gentleman’s assertion. Placing an extra tax burden on the private sector during the lowest point in a downturn will make that downturn even worse. The cash that has been built up by the private sector is waiting to encourage the recovery as it begins and as the private sector begins to recover. At that point, people become more confident because they have kept their own money, rather than it having being taken by the Government.

[Mr Nuttall]

Does my hon. Friend agree that, contrary to what has been said, it is the private sector that is leading the way in this recovery? The fact is that the private sector has created 1.3 million new jobs since the last election.

[Jacob Rees-Mogg]

I am very glad that my hon. Friend has put it in that way. Sometimes, the Government claim that they have created 1.3 million private sector jobs, and that is a turn of phrase that I particularly dislike. It is not the Government who have done it; it is the private sector.

I am particularly enjoying discussing the right hon. Gentleman’s Bill. It is sometimes alleged that politics has all become too similar and that all the parties agree. That might be true of those on our Front Benches, but there are still some of us on the Back Benches who are willing to put forward in a more forthright way the views that we hold according to our respective political traditions. That certainly makes the debate in the Chamber more interesting.

Having set out my broad-brush objection in principle to what the right hon. Gentleman has proposed, I want to move on to the details of the Bill. And here it gets worse. The Bill is an astonishing, fundamental attack on some of the basic principles that we ought to enjoy. As a taxpayer—I am sad to say that I am not in the top 250, although I would not mind if I were—I have a right to privacy. The Government do not have a right to publish my financial information; that is my private, confidential affair. I am not advocating tax evasion, which is a criminal activity. It is quite right that it should be criminal, and the Government should enforce those laws. However, the prevention of that crime does not require the Government to deny people their fundamental right to privacy.

People’s most personal and intimate financial details, as set out in their tax return, should not be made available to all and sundry, and it is quite right that the tax authorities should maintain vigorous rules of confidentiality, even when appearing before Select Committees of the House of Commons. It is a right that we all enjoy as British subjects that our financial affairs are a private matter. Yes, we have to pay a degree of taxation and, yes, we have to make declarations to the Revenue, but we do so on the understanding that they will be kept confidential. Once this begins with the top 250, the next stage will be the top 1,000 and it will develop further so that nobody has the right to maintain privacy of their own financial affairs. I thus oppose this provision very strongly.

I oppose less strongly the requirements for disclosure by public companies because they have exchanged a right to privacy in return for limited liability, so they are expected to make disclosure and are obliged to do so to their shareholders. Clause 1 deals with “Disclosure of financial information by large companies” and from the perspective of a shareholder as an investor, I believe that I am entitled to such information anyway; and with large public companies, the shareholder list is so extensive that, once that information is given to shareholders, it is effectively in the public domain.

I add at this point that my background and career have been in investment management, so I know that the more information we get from listed companies, the easier it is to do the job of an investment manager and the better the investments it is possible to make. Perhaps inadvertently, then, the right hon. Gentleman will help the investment community in that, if clause 1 were introduced, financial analysts in the City of London would practically be dancing with joy at their ability to find out every single financial statement of large private companies. It might be quite helpful in stopping them from hiding unwelcome, loss-making subsidiaries somewhere at the bottom of the balance sheet, tucking them away under a contingent liability. Because this is essentially dealing with already public companies, I would make no objection to the clause, but I would maintain the privacy of individuals—and of trusts.

I do not think that trusts should be attacked in this way. Trusts are, in fact, one of the glories of the British legal system. They are much less understood on the continent, but they allow many protections to be built into ownership. Trusts allow the protection of minors in how they are structured and they allow continuity in the holding of assets, including allowing some of this country’s great historic treasures to be kept within the country through the trust structure of ownership. Putting unduly onerous charges on them and requirements to report would, I think, be unreasonable.

Looking at the detail, the idea is that, if trusts do not meet the requirements, their income should go to the Crown. That is what happened in the Court of Wards in the 17th century. It was one of the things that caused such trouble between Parliament and the King because the Crown was able to take the estates of minors and effectively ruin them during the minority of the beneficiary. We moved away from that type of arbitrary rule of giving power to the Crown—in this context, it is not a personal Crown; the Crown is the Executive—to do things such as take funds from private property, not in the form of tax, but in a regulatory way, squeezing income for a certain period until onerous requirements are met.

I think that would be an extraordinarily unsatisfactory way of proceeding. It would undermine the right of property—again a fundamental right that we ought to enjoy. Going back to the Magna Carta, the Crown cannot take property away from people unless there is a judgment—a judgment in a court—against them; it cannot be done on the basis of some failure to meet some bureaucratic standard. This seems to me to illustrate where the Conservative, a believer in the rights of property and a believer in the individual, stands up against the socialist, a believer in the collective and the rights of the collective to override the rights of property. I stand four-square in favour of the rights of property and four-square, too, in favour of the rights of the Crown dependencies, by and large, to regulate their own affairs.

The Bill is again onerous in what it requires to be done, by Order in Council, for territories that, by and large, are no longer treated as mere colonies. The Crown dependencies are allowed to develop and run their own affairs and have their own elective councils to take charge of those affairs. The Bill is a throwback to how this country behaved in the 19th century when we felt we had a greater right to order about the non-dominions—with dominions starting, first with Canada, in the latter part of the 19th century. We seem to be taking the Crown dependencies back to a period before dominion status started to be granted. I consider that to be undemocratic, and unfair on them. It attacks their fundamental livelihoods, namely, their ability to provide financial services and a degree of confidentiality at the same time.

There is a fundamental disagreement—and I am not entirely of the Government’s view either—about the attempt to elide tax avoidance and tax evasion. It is very important to be clear about the difference between the two. Tax evasion is criminal, illegal deliberate breaking of the tax law; tax avoidance is following the law as it is written. It seems to me that, when people are being accused of avoiding tax, it is the job of Parliament to pass good laws that make that avoidance difficult, and to make the tax collectible by Act of Parliament, rather than turning the position the other way round and saying “We are not very good at writing tax law, and therefore we will make you disclose absolutely everything so that, ex post facto, we can determine how much tax we think you ought to have paid.” That strikes me as fundamentally unjust.

It has been a solid principle of British law for decades formally, but for centuries effectively, that the individual taxpayer does not have to arrange his affairs so as to increase the amount of tax that the Revenue is entitled to take. It is an important part of justice that the law should be clear, and should be enforced fairly.

[Jacob Rees-Mogg]

My understanding of aggressive tax avoidance is that it is, in fact, tax evasion when the Revenue has not yet got around to taking action. One of the schemes reported in the newspapers involved some comedian whose name escapes me: he is modern, and apparently very funny if you like that sort of thing. What he was doing struck me as evasion, not avoidance, although that was not directly his fault. It seemed to me that the scheme was so far removed from any sensible understanding of the tax law that “aggressive tax avoidance” was essentially a euphemism for “We will try to scrape things back rather than charging people.” I should prefer to see Her Majesty’s Revenue and Customs using the law as it is, and testing the law in the courts to establish whether such activity really is evasion. If it proves to be evasion, people should be punished accordingly, and if it proves to be avoidance, it should be considered legitimate.

I do not think it is possible to say that there is the law, there is the non-law, and somewhere in between there is something that the Government would quite like us to do. There are an awful lot of things that the Government would quite like us to do. At one point, they wanted us all to eat five vegetables a day. Indeed, they probably still want us to eat five vegetables a day, but that cannot be law. It is wrong to try to say that good behaviour, generosity and charity should be a matter of law. That is a different concept. The law, with all the might and power and sanction behind it, is a more absolute thing than that.

[Mr Nuttall]

Does my hon. Friend accept that there might be such a person as a diligent tax avoider—someone who reads the legislation, spots a loophole, and decides to take advantage of it?

[Jacob Rees-Mogg]

Sometimes the Government want people to avoid tax. Sometimes they allow people to do that because, although they do not much like it, they cannot stop it. Let us take, for example, people who bring cigarettes into this country from abroad. There is an agreement with the European Union that, if people have bought cigarettes in another member state, they are entitled to bring them in. In that way they collectively avoid, probably, billions of pounds’ worth of tax. Duty free is tax avoidance, a form of tax avoidance that some of us rather enjoy when we have been a bit further afield than the European Union. Pension funds are tax avoidance. Individual savings accounts are tax avoidance. All those elements of tax avoidance are elements of which the Government approve. It is, I think, unreasonable to say that people should arrange their affairs so as not to take advantage of legitimate tax avoidance that is in the legislation—and who is then to decide whether the tax avoidance provided by pension contributions is legitimate or the tax avoidance provided by some business start-up scheme has suddenly become illegitimate? It is the law that should be deciding these things, and the best way to solve the problem is not by denying people the right to privacy, not by confiscating their property, not by excessive and onerous burdens on the taxpayer, but by having a much simpler and clearer tax system without the Government giving all sorts of incentives to do one thing rather than the other.

We need a more Ronald Reagan-style approach to taxation where deductions are removed and rates come down. That leads, by and large, to more people paying their tax. If we go down the other route and have an incredibly onerous reporting system and put ever more burdens on individuals and on trusts, all that will happen is that those on The Sunday Times rich list—a vast number of whom are foreign nationals who have come to live in this country, and who are very mobile and who bring wealth, prosperity and employment into this country—will take up their wealth and leave.

What sort of a nation do we want to be? Do we want to be a nation that encourages enterprise, that believes in freedom, that respects the right of property and, crucially, the rule of law, or do we want to be a nation of arbitrary Government? The choice is very clear, and I am very grateful to the right hon. Member for Oldham West and Royton for bringing before this House the question of whether we want the fundamental arbitrariness of socialism: the belief that the state—the collective—comes first, and individual rights and privacy are trampled upon to ensure that the state can get what it feels like. That is not the nation I want to see us become. I want one, as we have historically been, based on strong and enterprising individuals who obey the law because they feel that the law is part of them and part of the nation they belong to. Therefore, I hope this Bill will be utterly rejected.

[Mr David Nuttall (Bury North) (Con)]

It is, as always, a great pleasure to follow my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg). I entirely concur with his remarks and rise to oppose the Bill. I entirely accept that the right hon. Member for Oldham West and Royton (Mr Meacher) has introduced this Bill with the very best of intentions. I am sure he wants to achieve for the people of our country the same as I want to achieve for them: improved conditions and high-quality public services. However, I am by no means convinced that the way to do that is by introducing measures such as those contained in the snappily titled United Kingdom Corporate and Individual Tax and Financial Transparency Bill.

When I first read this Bill, I did not know where to begin in expressing my thoughts as to just how bad a piece of proposed legislation it was. I do not criticise the manner in which it has been prepared and written, I hasten to say. I am sure that Richard Murphy, who prepared it, has done an excellent job, and I have read the article he wrote about it. I am sure that he, too, had only the best intentions when he put this Bill together. However, it does absolutely nothing to increase the wealth of this nation. It does nothing to help generate new industry and new services, or to promote economic growth. I am prepared to accept that the Bill is born out of intentions that were good, but I fear that it will have nothing but the opposite effect.

I was surprised and disappointed, perhaps in equal measure, that no explanatory notes accompanied the Bill—there were none in the Vote Office when I asked for them—and no assessment had been provided of its possible impact on British companies and individuals. Without an impact assessment, I can only imagine what the impact would be. I shall discuss my conclusions and imaginings in due course, but I assure the House that they were not that the Bill augured well for this country’s prosperity.

[Charlie Elphicke (Dover) (Con)]

My hon. Friend is making a detailed and thoughtful argument. Does he believe the Bill would be likely to lead to further administration for companies in this country and would increase the regulatory burdens on them?

[Mr Nuttall]

I am grateful to my hon. Friend for that intervention, which I can answer in one word—yes. I absolutely believe the Bill would increase the regulatory burden on companies. We must draw a distinction here, as my hon. Friend the Member for North East Somerset did. Large, well-resourced public companies may have the capability and capacity to deal with yet another piece of legislation, and, as has been mentioned, there may well be good grounds, particularly for financial analysts, for this information to be in the public domain. However, the Bill goes far, far wider than just the top 100 public companies—the FTSE 100 companies.

My reading of clause 2, on which I am prepared to be corrected if I am wrong, is that the next 150 companies are not necessarily public companies. Subsection (1)(b) refers to

“those 50 large companies, not being members of the FTSE 100, that have, when arithmetically combined with their UK resident related undertakings, the largest by value UK taxable profits before the offset of all tax allowances and reliefs of any sort whatsoever in a year ended 31 March”.

That does not restrict the provision’s scope to public companies, so one must conclude that private companies will be included. The same applies in respect of paragraph (c), which deals with the next 50 largest companies by their

“value of supplies in the United Kingdom, whether chargeable or exempt, for the purposes of value added tax”

and paragraph (d), which deals with

“those 50 large companies”

that have

“the largest liability to make payment of income tax and national insurance contributions”.

In other words, the greatest employers in our land are being attacked by this Bill. I cannot believe that the Bill will encourage those companies, so the answer to the question asked by my hon. Friend the Member for Dover (Charlie Elphicke) is yes, it will undoubtedly add to the burden, particularly for the banks.

[Charlie Elphicke]

I praise the right hon. Member for Oldham West and Royton (Mr Meacher) for bringing the Bill to the House as he is a sincere campaigner against tax avoidance—a concern I share. Does my hon. Friend agree, however, that a better way to tackle tax avoidance is to get rid of the loopholes by simplifying our tax system and making it easier for people to understand?

[Mr Nuttall]

My hon. Friend is absolutely right. My view—I suspect it might well be that of my hon. Friend, too—is that if the Government wish to increase the tax yield on behalf of the nation and to make it easier for individuals and companies to abide by their obligations, the way forward is to pass simpler tax legislation that we can all understand. I am sure that my hon. Friend has greater expertise in these matters than I do, but I have always found tax legislation particularly difficult to follow. I do not know the latest figures for Tolley’s tax guides, but when I was in practice in the legal profession they were substantial volumes and I suspect that they can only have grown in the past few years. Each one, on one tax alone, is a substantial doorstop.

It is no surprise that loopholes are discovered by accountants and tax advisers because the law is so complex and convoluted. There are so many different taxes, some of which overlap, that there is scope for tax loopholes to arise by accident. Governments do not set out to create tax loopholes other than those that are set out in legislation by design, they are precisely what they are called—tax loopholes.

As has been mentioned, it is often the Government’s desire to create what might be called loopholes, such as ISAs. I have been waiting to get to this point, as it gives me my second opportunity this morning to refer to ISA. This time, I do not mean the International Seabed Authority but the individual savings account. Before I looked into deep-sea mining, that was the only form of ISA I had heard of. ISAs are a form of tax avoidance set up to replace personal equity plans and were established as a means of encouraging people to save. They were set up to encourage private individuals to save in a tax-efficient manner in that they would not have to pay income tax on the income their account had earned. That could be called a tax loophole, but it is a legal tax loophole set up by the Government.

Let me return to the Bill. We must draw a distinction between tax evasion and tax avoidance. Let us be clear: tax evasion is already illegal, but almost weekly in this House I hear the two terms being confused. People say that someone has been a tax avoider, suggesting that they have acted illegally. Well, if they have, they are not a tax avoider; they are a tax evader, and they should be brought to book and prosecuted. I have no sympathy with them whatsoever. If someone has deliberately under-declared their income, I entirely agree that they should be brought to book by the Revenue and Customs, that they should be prosecuted and, in certain cases, sent to prison. Let us not beat about the bush. I am sure I am in agreement with my hon. Friend the Minister on that. I do not want to go easy on people who have deliberately avoided their obligations to society by breaching our tax legislation in such a way as to avoid paying their dues and demands under the law. That increases the burden on everyone else.

Of course, we already have measures in place to provide the mechanism for the Revenue to ferret out these people. It can open up inquiries into their tax affairs, and it frequently does. A whole industry exists around dealing with inquiries into people’s tax affairs. My accountant sent me details of an insurance policy that I could take out for that very occasion. I could pay a premium, and then if my tax affairs were investigated by the Revenue, the policy would cover my accountancy costs while the inquiry was dealt with.

However, returning to the Bill, our Government have already taken a great deal of action on tax avoidance and tax evasion. Since 2010, the Government have collected over £23 billion in extra tax by challenging the tax arrangements of large businesses. I am informed that, by tackling transfer pricing alone, the Government have collected £2 billion since 2010. It may well be that the right hon. Member for Oldham West and Royton is introducing the Bill because he thinks that those figures are not high enough. If the measures in the Bill are such a good idea, why, in the 13 years of the previous Labour Government, under Tony Blair and the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), was none of these measures introduced? If it is such a good idea now, why was it not such a good idea then? I do not know whether my hon. Friend the Minister ever went to the Treasury team at the time with this Bill and said, “Look, here is the answer to our problems.”

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. The debate is not about then; it is about now, and it is about the Bill before us. I do not want a debate on whether it should have been done in 1985 or 1998; it is about now. I know that you are very good at wanting to get into the detail of the Bill; you must get back to it.

[Mr Nuttall]

Thank you, Mr Deputy Speaker. I would just make the point that perhaps the reason why such legislation was not introduced by the last Labour Government is that it is not a very good idea. I will attempt to demonstrate, if I may, by looking, as you rightly suggest, at the detail of the Bill, why it is not a very good idea.

Detailed the Bill indeed is, running to 13 clauses. It deals essentially with three elements: the disclosure of the tax affairs of large companies, the tax affairs of individuals, and the tax affairs of trusts. Those are the three primary areas that the Bill seeks to attack. The first of those relates to large companies, which, in answer to the question of my hon. Friend the Member for Dover, we have already established covers not just public limited companies but those purely in the private sector.

The Bill provides that the Companies Act 2006, passed under the last Labour Government, should be amended by adding new section 409A, which would require a company to provide in respect of each one of its related undertakings its registered name; the jurisdiction of its incorporation; its company number; the jurisdictions in which it trades; the trading name it uses in each jurisdiction if that is different from its registered name; the precise nature of its trade, sufficiently described in such a manner as to enable those activities to be accurately identified; the percentage of the related undertaking controlled by the company; a statement of the turnover, net profit before tax, current taxation liability owing, number of employees and their total employment cost and the net assets of the related entity for the period for which the company is reporting, whether such data be audited or otherwise; and finally, the web address where the most recent financial statements can be found. If that does not increase the burden on companies, I do not know what does.

The real danger with all this added bureaucracy and red tape is that it makes this country a less desirable place to do business. As I said earlier to my hon. Friend the Member for North East Somerset, there may well be merit in respect of a public company putting this information in the public domain, but I do not see that to be case in respect of private limited companies, which are not excluded. Certainly I do not see the benefit in respect of individuals.

Clause 3 places on HMRC an obligation, no later than 1 March each year, arithmetically to combine for each taxpayer who has submitted a tax return by 31 January in respect of all their taxable income of all sorts, with a few exceptions, and to publish those in descending order of magnitude—in other words, the 250 wealthiest individuals. This clause gives the revenue just one month to complete the task. The tax returns need not be in until 31 January, and within one month it has to have carried out this rather complicated calculation, which I will not go into the details of. Subsection (2) requires HMRC to publish, no later than 15 March each year, the 250 tax returns for the previous tax year ended on 5 April that ranked highest on the listing produced in accordance with the provisions of subsection (1). Subsection (3) requires that they should not be anonymised, and this is the crucial point about this clause—they would all be public information. In other words, the private tax affairs of any individual will no longer be private.

I can draw only one conclusion from that: there is a real risk that, were the Bill enacted, it would cause the wealthiest individuals in our society—I hasten to add that I very much doubt the Bill would ever bother me—to go elsewhere. We as a nation would lose their wealth and the income it produces. To return to the point with which I started, I fail to see how that would benefit what both the right hon. Member for Oldham West and Royton and I want to see, which is improved public services. We would not be able to improve our public services if the wealthiest individuals in our country and all the tax they pay disappeared as a result of onerous and intrusive obligations that the Bill imposes on them. They would simply use their wealth to look around the world, find a more suitable home and tax regime and leave our shores.

I want to address in particular the obligations that the Bill places on our banks, because they give rise to a great deal of complication. Clause 5 requires financial institutions to

“notify Her Majesty’s Revenue and Customs and Companies House that they have opened or closed an account in the United Kingdom for a company within thirty days of that account being opened or closed stating—

(a) the name and registered number of the company;

(b) the address at which they correspond with that company;

(c) the names and full addresses, dates of birth and nationalities of those persons who they have accepted as having authority to take action with regard to the account;

(d) the names and addresses, dates of birth and nationalities of those persons who they have identified as the beneficial owners of the company in question as required by Regulation 5 of the Money Laundering Regulations 2007;

(e) the number of the account that they have opened; and

(f) the numbers of any other accounts that they maintain for the company.”

I may be reading this wrongly, but there does not appear to be any question whatsoever about the size of the company. It does not say that the company has to be of a certain size; it simply says that if a company opens a bank account, it has a duty to report it. That covers literally thousands and thousands of bank accounts. It would increase enormously the burden on our financial institutions and banks at a time when we want them to concentrate on the much more important task of getting the British economy moving again and on lending to businesses. I do not want our bankers to have to fill in forms and write down the names and addresses of companies and the addresses to which they write. That would stop them doing their primary task, which is to play their part in getting the British economy moving and growing. As we know, it is starting to grow, but there is much more to do.

Let us be clear: no one is suggesting that the Bill does not have the best of intentions behind it. However, the Government have already increased significantly the compliance yield, which is the amount that the Government expect to get from tax—