Tax Avoidance and Evasion

Debate between James Cartlidge and Meg Hillier

Tuesday 14th November 2017 Commons Chamber

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

Having listened to the hon. Member for Morecambe and Lunesdale (David Morris), I am dismayed. What we are talking about is openness and transparency about tax. The right hon. Member for Sutton Coldfield (Mr Mitchell) set the tone for this debate, along with my right hon. Friend the Member for Barking (Dame Margaret Hodge). This is an important cross-party issue, and I agree with nearly every word—in fact, every word—that the right hon. Gentleman said. Tax avoidance and evasion harms countries around the world, including developing countries. It hits taxpayers in our constituencies because the wealthiest people and large corporations find ways to reduce their tax bills or to avoid paying tax completely.

[James Cartlidge]

Will the hon. Lady give way?

[Meg Hillier]

I wish to make some progress, please.

I congratulate my right hon. Friend the Member for Barking on securing this debate, and I congratulate the International Consortium of Investigative Journalists, “Panorama” and The Guardian for shining a light on what has come out of the Panama papers. The Public Accounts Committee has been shining a light on aggressive tax avoidance for some years. I pay tribute to my right hon. Friend, my predecessor as its Chair, for the work that she led us through when I served as a member of the Committee. It is thanks to the Committee’s work under my right hon. Friend that some of the worst excesses of avoidance came to light. International action—it has to be international—has led to real change at a faster pace than we have seen under any Government for many decades, by making public more information about corporations’ tax arrangements.

We continue to pursue this issue, and with political will, we can make progress. In December last year, the Public Accounts Committee held an international tax transparency conference. We had imagined, in our own humble way, that we might get people from some European Union countries to come along; we were amazed that representatives from countries around the world came. More than 20 of them signed up to our pledge on international tax transparency, to fight for our citizens and through our Parliaments to press our Governments to be bolder and faster, as the right hon. Member for Sutton Coldfield said. There are the beginnings of some political will, but we are not moving at the right pace.

The release of these papers and this information is staggering to our constituents, who just pay their taxes and have no idea how hard the wealthiest work to avoid paying tax that would help our country, particularly in this time of austerity and pay dampening. Public country-by-country reporting for large corporations is something that the Government could do right now. My right hon. Friend the Member for Don Valley (Caroline Flint) has been a champion on that issue and managed to work with the Government to change the law. The Paradise papers show that the tax arrangements we are discussing come to light only when the information is in the public domain. We need to see fast change. The establishment of offshore trusts that then buy homes, wine and cars for the beneficiary, without tax being paid, or the paying of money into offshore trusts that then make loans to individuals that are never repaid—these things cannot be right, and although they may be legal, I doubt whether they are in some cases.

The Panama papers were released in April 2016. According to the representatives from HMRC who appeared before the Select Committee last week, 66 criminal or civil investigations are currently under way, four people have been arrested and a further six have been interviewed under caution. Even with that haul, HMRC only expects an additional tax yield from the Panama papers of £100 million. That is not to be sniffed at, but it is small fry in relation to the official tax gap. That just demonstrates the lengths to which people will go to hide their money and the importance of making sure that HMRC has the resources required to pursue this matter.

We need public country-by-country reporting to be enacted. Yes, it needs to be done internationally, but if international players will not lead the way, let the UK Government take us forward. Let us be bold and brave and make sure that we set the tone and the standard for the world. The Select Committee has urged HMRC to consider a wealth tax for wealthy individuals, as they have in Japan and Australia, to make it easier to track down where people hold their wealth and where they are paying tax.

We need continued parliamentary and public pressure, so that businesses voluntarily move towards more openness. The fair tax mark has already been taken up by 30 companies, and we hope that it will be taken up by many more. I would like to see HMRC take forward more prosecutions to set an example to those who seek to avoid tax and to make sure that people question the highly paid tax advisers they recruit, because it is no longer good enough to say, “I didn’t know what was going on; I just paid someone else to do it.” Everyone needs to take responsibility for their actions, whether they are corporations or wealthy individuals.

As I said, we need to give HMRC the resources to tackle tax avoidance and evasion. As my right hon. Friend the Member for Barking said, there is a very high return rate for every pound of taxpayers’ money invested in HMRC’s investigatory arms. It is important that the Exchequer sees that benefit and ramps up the money that is available. An arbitrary target of 100 prosecutions annually has now been set. That seems an odd figure to have plucked out of a hat. We are pressing HMRC to explain where that figure has come from out of the blue. We need to make sure that the right number of prosecutions take place, not just set an arbitrary target.

My constituents pay their taxes and they deserve better. Tax is paid for the common good, and my Committee works hard to make sure that tax money is spent by the Government efficiently, effectively and economically. We need to speed up on the measures to crack down on aggressive tax avoidance and, obviously, tax evasion. We need to move towards a world in which the impact of someone not paying their fair share of taxes is recognised as something that is plainly wrong.