Finance Bill

Debate between Ian Swales and Michael Connarty

Tuesday 1st July 2014 Commons Chamber

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

On the question of tax avoidance, if the Government do not design the tax system properly and people who should pay tax can avoid it if they do so legally, that might be correct legally, but it is not necessarily correct morally. Having said that, if the Government design the tax system in that way and someone takes advantage of it, particularly an entrepreneur, who might take the money they save in tax and reinvest it in further jobs and enterprises, that person can defend that on the basis that if the Government were really skilful they would not be able to avoid it. On the question of tax evasion, people should go to prison if they evade tax. It is very simple in my view.

I have written to the Minister on behalf of a constituent who is an entrepreneur. He is about to retire and will probably dispose of his company in the process, because he is not talking about another income stream coming from continuing contact with the company. He accuses the Government of bringing in retrospective legislation in this Finance Bill, because from clause 192—I have read this part of the Bill right the way through to chapter 3, which is on accelerated payments—it is quite clear that the Government intend these retrospective investigations to go back to 2004. It gives HMRC power to declare in the arrangements for follower notices the ability to claim the tax based on other cases that might be similar to the case it is investigating or discussing. If it does so, it can claim the payment from the individual based on that follower notice.

[Ian Swales]

On a quick point of clarification, the retrospective application that most people are concerned about is that which was applied in the Finance Act 2008, which was enacted by the previous Government.

[Michael Connarty]

I understand that the advice given to my constituent, who is a business person, came from one of the best financial advisers in Scotland. In fact, it was the financial adviser who wrote to Equitable Life long before anyone realised that it was defrauding people by enhancing assets falsely, and who was the first person called to give evidence to the Treasury Committee. They have advised my constituent that the problem is, in fact, in this Bill and the performance under its terms. It might be based on a previous ability to do so, but the concept of follower notices and accelerated payment notices are, in fact, in this Bill and did not exist before.

The question is whether the provision is retrospective, because I believe that the Minister is on record—I think that it might be in writing—as saying that he does not agree with retrospective tax powers. I also understand that the Treasury Committee confirmed in a recent report that this is indeed retrospective and the Government are yet to explain what is wholly exceptional about the performance they have put in this Bill—the follower notices and the accelerated payment notices—that will justify the use of retrospective claims for taxation.

It seems to me that when someone is doing their tax planning, particularly when coming to that later period in life—quite a few Members of this House are in that age group—they look at the law at the time, take tax advice from advisers, make arrangements and do their tax planning accordingly, and that is what they think will be their future income. Those people tend not to be receiving a pension paid by someone else; they are earning their pension by their own efforts and enterprises. If that advice is taken and their tax planning goes ahead, I want the Government to assure me that they will not then be told after this Bill is passed, “You made that arrangement in 2000, but we have decided that from 2004 that that tax planning, although legal then, is not legal, so we want you to pay a substantial amount of tax back that was not in the tax arrangements then.” I think that it is only just that the Government give people an assurance that they will not come seeking to turn what was a legal tax arrangement into an illegal one and cost them a substantial amount of money.

Europe

Debate between Ian Swales and Michael Connarty

Wednesday 30th January 2013 Commons Chamber

[Michael Connarty]

In 20 years in this place, I have never found it inconsistent to support the European Union. I supported it when I voted in the first referendum, and I supported it when I was the chairman of the Mid Scotland and Fife European parliamentary constituency and convinced a Eurosceptic MEP to see the benefits of Europe. There is no inconsistency between my job as a Member of Parliament and my support for the EU.

The big questions that we should be discussing—the ones that were touched on by the shadow Foreign Secretary—are all included in the Irish presidency agenda. The budget, the next financial perspective, the multi-annual framework and the need to deal with debt in the eurozone are all on the agenda and are being discussed on a daily basis by the 27 countries and Ministers. We should be discussing low participation in the labour market, unemployment levels and the massive problem of youth unemployment. The only comment that was made by the UK Government on the proposal for a youth, education and sport initiative—interestingly, I am the chair of the Council of Europe’s sub-committee on education, youth and sport—was that it should not be called the youth, education and sport initiative because that spelled “YES”. That was the one contribution from a UK Minister about what is on the Irish presidency agenda on youth employment. The Government have rejected the proposal for a guaranteed job or training place for every youth in Europe after four months of unemployment because they did not want that to interfere with what they call apprenticeships. In fact, apprenticeships in this country are not apprenticeships, but merely in-work training.

[Ian Swales (Redcar) (LD)]

As a fellow officer of the chemical industry all-party parliamentary group, I know that the hon. Gentleman is well aware that that is Britain’s leading export industry, ahead of the car industry. The chemical industry relies on long-term investment. Does he agree that the political risk premium that we now have will reduce the inward investment that is so important to that industry?

[Michael Connarty]

I totally agree. I would also point to things that are happening in the environment package, such as interference in health and safety in the North sea. Those things are being chased not by the environment directorate-general, but by the energy directorate-general. I know of three or four issues that it is trying to get into an energy chapter that it did not get into the Lisbon treaty. We have to watch the Commission creep and fight against it, as I have said before.

As for what it will mean, what is Fresh Start—the hon. Member for Daventry (Chris Heaton-Harris) and his colleagues—really about? Does it mean to renegotiate the 1972 treaty as the hon. Member for Stone (Mr Cash) suggested? No, it does not. If not, what is the agenda? It seems to me to be very light. As the hon. Member for Daventry said, the changes suggested are not radical ones that will make the EU a different place when people vote on the issue. That is the reality. It is about changing small matters, but it will not, for example, reinstate the UK vetoes. If that is the Government’s agenda, they are promising people a false referendum because it would not be a different Europe. If that is the case, why not hold the referendum now? Basically, Europe is not going to change, because this is a political ploy before an election, not a genuine attempt to re-establish the perspective on Europe.

Will the UK be allowed to renegotiate A8 citizens back to EU countries—one of the big cries from those in UKIP? No, it will not. Will the UK deny safe working conditions in its factories and building sites? I hope not. I worked in a toy factory in the ’70s. The EU came to the rescue by putting proper guards on the machines and, where they had damaged people, proper constraints. Will the UK return to the days of failed extradition processes? We used to talk of the Costa de los Bandidos in Spain because we could not get the crooks back here. Now we use the European arrest warrant. Will we abandon that? It is a nonsense. Will we make people in hospitals work longer hours? I do not think so.

My hon. Friend the Member for Ogmore (Huw Irranca-Davies), who speaks on agricultural matters, made an interesting point about meat eaters and I had a vision of carnivores in the Conservative party—carnivores or cannibals, I am not quite sure how they should be described because when the right hon. Member for Wokingham spoke I had a feeling that he would happily feed on the bones of his own Government if he could not feed on the bones of the European Union.

Those in Fresh Start basically hope that the EU is changing. Yes, it is changing because of the euro crisis and the crisis of the capitalist economy in Europe, but it is not changing fundamentally in its structures and powers. It will not change unless we repeal the Lisbon treaty and we are not going to do that. All the things that were mentioned about agricultural policy and the common fisheries policy are on the agenda of the Irish presidency, as is a more competitive single market. On the reform of the Council and Commission, since the Commission is set in stone, it will make policy and others will choose whether to implement that policy in the Council. My worry is that the feeding frenzy of the carnivores will not be justified by what the Prime Minister tries to do in this fake referendum, and in fact they will feed on the bones of their own Government when that fails.