Sanctions

Debate between Jesse Norman and Kevin Hollinrake

Thursday 22nd September 2022 Commons Chamber

[Jesse Norman]

I am extremely grateful to my hon. Friend for his question, and the House recognises his great expertise in this area. He will understand that I am not going to comment on the future sanctions policy of this Government, but he can take it as read that we are looking extremely closely not just at ways of further extending this escalating programme of sanctions that has elaborated itself over the last few months, but at closing some of the loopholes. If he wishes, I will make certain that my officials have sight of the letter he has written and will write to him on the matter specifically.

I turn to the No. 13 regulations, which widen the definition of scope of activities for which a person can be designated. His Majesty’s Government have expanded the definition of destabilising, undermining or threatening Ukraine and supporting or obtaining a benefit from the Russian regime. This brings into scope many individuals and entities in the Russian Government, its agencies and its armed forces. The regulations make minor amendments to the definitions of being involved in, obtaining a benefit from or supporting the Government of Russia. These have the effect of broadening the interpretation of being associated with a designated person to include immediate family members who may, and often do, hold assets on their behalf. The regulations also provide an exception from trade sanctions for humanitarian assistance actively delivered in non-Government controlled areas of the Donetsk and Luhansk oblasts. Finally, they expand the definition of ownership in relation to ships and aircraft, and they correct errors and omissions in previous regulations.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I welcome my right hon. Friend to his place. He mentions family members who are associated with sanctioned individuals. He will probably be aware of, but unable to comment on, the case of Alisher Usmanov, who is sanctioned by the UK, the EU and the US but has passed on some of his wealth—£2.1 billion, I think—to his sister, who is outside the scope of our current sanctions regimes. Will my right hon. Friend’s tightening up of sanctions, which I welcome, mean that we can go after people such as Alisher Usmanov’s sister and the assets she holds on his behalf?

Finance (No. 2) Bill

Debate between Jesse Norman and Kevin Hollinrake

Committee stage & Committee of the Whole House (Day 2)
Tuesday 20th April 2021 Commons Chamber

[Jesse Norman]

HMRC is addressing these issues. That is why this Bill has so many measures in it that are focused on the disclosure of tax avoidance schemes, toughening up that regime and improving the regime against the promoters of tax avoidance. But let me say to the hon. Lady that I thought her remark was dripping with condescension towards the ordinary taxpayers of this country. The fact of the matter is that people, from whatever walk of life, are perfectly competent—they do not need to be patronised by Labour Members of Parliament—at working out when something looks too good to be true. That is why so many—such a high percentage; well over 90% of people—do manage to work out what is too good to be true and behave on that basis. To suspect otherwise, when HMRC is absolutely working as hard as it can to make sure that the truth is out there and well understood, and is closing down opportunities for misleading advertising, in a recent initiative with the Advertising Standards Authority and a whole host of other things, is completely wrong.

I am grateful to my hon. Friend the Member for Burnley (Antony Higginbotham) for what I thought was a very robust and thoughtful contribution. He is absolutely right to highlight that HMRC has not been slow in this area. He was right to pick up the point about VAT on online platforms, but, of course, that is merely the tip of the iceberg. The hon. Member for Ealing North (James Murray) somehow suggested that we were failing to tackle this issue. The tax gap, as he pointed out, is 4.7%—a historic low. Let me remind the House and him of some of the actions that the Government have taken—leadership on base erosion and profit shifting over many years, the diverted profits tax, the corporate interest restriction, the tax charge on offshore receipts, hybrid mismatch rules, our new digital services tax.

[Kevin Hollinrake]

I very much welcome the digital services tax, which is there to try to make sure that everybody pays their fair share, as the Minister said in his opening remarks. Having said that, it does not apply to Amazon’s direct sales on that platform. It applies only to third-party merchants, so there is not that much of a level playing field between those two different cohorts. Will he look at that in future?

[Jesse Norman]

Brilliantly, my hon. Friend has intervened just before I was about to mention that we are consulting on an online sales tax, which is a parallel initiative. Indeed, the digital services tax includes the introduction of a new basis for tax—that is, UK user content. That itself is a flag to the energy and innovation that the Government are seeking to bring to this issue, and I thank him for his comments.

The hon. Member for Ealing North asked about the beneficial ownership registry on overseas companies that own or buy property in the UK. As he will know, the Government published a draft Bill. It has gone through prelegislative scrutiny. The process has, for reasons that the House will not need any reminding of or highlighting, been somewhat interrupted over the past year, but the Government plan to introduce the Bill in due course, so I reassure him on that point.

The hon. Gentleman raised the question about minimum corporate taxation. He should know that the Government have been, as I said, in the international vanguard in trying to drive change on base erosion and profit shifting, and processes of international tax agreement through the OECD. We were also in the vanguard of delivering the creation, originally, of the G20 commitments for a comprehensive global solution to this issue, based on two pillars, and we are leading the way, during our G7 presidency, on this issue, as the Chancellor has made clear. So we absolutely welcome the renewed commitment that the US Administration have made in this area, which we think is a very important change.

Finally, I turn to the important amendment 77, which was tabled by my right hon. Friend the Member for Sutton Coldfield and the right hon. Member for Barking (Dame Margaret Hodge). My right hon. Friend was right to highlight the importance of eternal vigilance—I absolutely share his view on that—and he was right, as the right hon. Lady was, to talk about the ever-shifting and evolving ways in which some of the malefactors in this area are ceasing to operate, and, of course, that is true. However, if I may say so, he erred in suggesting that the penalty on the enablers—that is to say, a sum equal to the gross fees to be collected in relation—was in any sense modest or small. It is one of the largest charges in the tax system, and because it is a gross fee, it is of course charged on the total amount of income. It is therefore income on which the promoter will have to recognise all their costs, and indeed any profit and any tax they may have paid, so it is actually a fairly formidable penalty.

Taxation (Post-transition Period) Bill

Debate between Jesse Norman and Kevin Hollinrake

2nd reading & 2nd reading: House of Commons
Wednesday 9th December 2020 Commons Chamber

[Jesse Norman]

In addition, the Bill amends current legislation for excise duty to be charged when certain goods, such as alcohol and tobacco, are moved from Great Britain to Northern Ireland. The changes are necessary to ensure that there is a fully functioning VAT and excise regime in place in relation to Northern Ireland at the end of the transition period.

In line with the protocol, Northern Ireland will maintain alignment with existing EU excise rules. That means a change to excise duty is required when goods are moved to Northern Ireland from Great Britain, but the Government are adopting an approach using flexibilities and EU rules that minimises changes for excise goods moving between Great Britain and Northern Ireland.

A small number of other taxation measures also need to be in place before the end of the transition period. The Bill introduces a new system for collecting VAT on cross-border goods. That includes moving VAT collection on certain imported goods away from the border and involving operators of online marketplaces in the collection of VAT at the point of sale.

In addition, measures in the Bill will remove the VAT relief on imported low-value items so that VAT will be due on all consignments, irrespective of their value. The relief has been the subject of long-standing abuse and removing it will build on Government efforts to level the playing field for UK businesses still further by protecting high streets from VAT-free imports. Together, the changes will improve the effectiveness of VAT collection on imported goods, tackle non-compliance and protect the flow of goods at the border.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I very much support the measures that the Minister is talking about. Why is the measure just for low-value goods? There will be other goods where a similar loophole applies, such as watches or jewellery that have a value above £135. Is this not an opportunity to close that loophole as well?

[Jesse Norman]

I thank my hon. Friend for his question, and I will take that under review. We have put in place a set of measures designed to tidy up the position that particularly arises in relation to the Northern Ireland protocol, as he will be aware, and the end of the transition period, and that has meant a change to low-value consignment relief and the changes I have described. I am grateful to him for his contribution and suggestion.

The Bill also includes provision for an increase in the rate of duty on aviation gasoline, which will apply across the UK. Otherwise known as avgas, the fuel is a form of leaded petrol predominantly used in leisure flying. The change made by clause 6 of the Bill will increase the avgas rate by half of a penny to 38.2p a litre from 1 January next year. By way of explanation, the Northern Ireland protocol requires that Northern Ireland continues to comply with the EU’s energy taxation directive following the end of the transition period. It sets a minimum level of duty in euros on unleaded petrol used for propulsion. After some careful consideration, the Government have chosen to apply the change to the whole of the UK to ensure consistency between Great Britain and Northern Ireland, avoid burdens on business and reduce compliance risks for HMRC.

The Bill also includes a clause to ensure HMRC has access to the same or similar tools to prevent insurance premium tax evasion as it does at present, regardless of whether an insurer is based in an EU member state. Overseas insurers are liable to pay insurance premium tax when they supply general insurance for UK-located risks. Occasionally, overseas insurers do not pay the insurance premium tax they owe, so it is important that HMRC has access to tools that deter and tackle that form of evasion. Up to now, it has been using EU provisions to prevent evasion by insurers based in EU member states.

Separately, HMRC can issue liability notices in cases involving insurers based in any country outside the EU with which the UK does not have a mutual assistance agreement. Given that the EU provisions expire at the end of the transition period, this clause will enable HMRC to issue liability notices in evasion cases involving insurers based in any country with which the UK does not have a mutual assistance agreement, including EU member states.

Finally, the Bill introduces new powers that will enable HMRC to raise tax charges under the controlled foreign companies legislation for the period from 1 January 2013 to 31 December 2018. This is a technical provision that will deal efficiently with the legacy state aid decision relating to the period before the UK left the European Union.

This Bill will give people and businesses throughout the UK certainty about the arrangements that will apply from 1 January next year. It will play a part in further safeguarding the unity and integrity of this country, both in the months ahead and long into the future. I commend the Bill to the House.

Stamp Duty Land Tax (Temporary Relief) Bill

Debate between Jesse Norman and Kevin Hollinrake

2nd reading & 2nd reading: House of Commons
Monday 13th July 2020 Commons Chamber

[Kevin Hollinrake (Thirsk and Malton) (Con)]

It is a pleasure to follow my hon. Friend the Member for Runnymede and Weybridge (Dr Spencer), and I will address one or two of his points, but first I must draw the House’s attention again to my entry in the Register of Members’ Financial Interests, and also apologise to the shadow Minister, the hon. Member for Liverpool, Walton (Dan Carden), as I inadvertently misled the House earlier when I said that Labour did not cut stamp duty in 2008; actually, they did, from a £125,000 threshold to a £175,000 threshold, but they crashed the housing market so badly that it made no difference whatsoever, which is why I cannot remember it. Interestingly, however, at the time, despite what he said in his speech, they made no dispensation in terms of buy-to-let investors—stamp duty was just cut across the board, regardless of what the property was for, so there was not some carve-out only for homeowners. According to the research, one thing that cut did do was boost activity, by 20%. Activity was at a very low level, as transactions were normally at 100,000 a month but they were down to 40,000 a month, so it was a pretty painful time, but the cut boosted activity, from that low level, by about 20%. Labour then withdrew the measure pretty early and activity fell away again, which is one of the reasons why we had such an extended recession from 2008 onwards.

I think certain Members have missed the point of the measure we are debating today. It is not just about helping some people get on to the housing ladder; it is also about activity. We all know that the housing market is a major driver of activity right across the economy. That is why many hon. Members have asked why on earth we are taxing something that is a major driver of activity across the economy. This is a transaction tax, and is therefore bound to slow the market down even in good times, let alone times such as this when we are trying to stimulate the economy.

This is not just about driving activity. Residential stamp duty brings in important revenue—about £8.3 billion every year. When my hon. Friend the Member for Runnymede and Weybridge talked about stamping out stamp duty entirely, I saw the sweat on the Minister’s brows as he was thinking, “Where are we going to find that £8 billion?”

[The Financial Secretary to the Treasury (Jesse Norman)]

My hon. Friend will be pleased to know that actually I remained as implacably calm as I always am. As a test of all colleagues who want to scrap taxes, I invite them to do exactly what he is doing and supply the missing revenue with some other suggestion. I did not notice that in the speech of my hon. Friend the Member for Runnymede and Weybridge (Dr Spencer), but I am still waiting; I look forward to hearing that before we finish.

[Kevin Hollinrake]

The Minister is absolutely right, and I will come to that.

The Conservative Government have improved the system of stamp duty significantly. It used to be a ridiculous slab tax that created distortions all the way through the market, but we made it into a slice tax—perhaps a slam tax—that gets very expensive at the higher levels and deters activity at the top end.

On the Minister’s point about where on earth we are going to get the money from, the reality is that this nation will come under huge tax pressure over the next few decades, not just the next few years. According to the Office for Budget Responsibility, because of the demands of healthcare and social care, if we do not change the tax system and claim more tax, our national debt will grow to three times our GDP—it is one times our GDP today—so we cannot simply scrap taxes without introducing alternative measures.

I am going to propose a measure. I would like the threshold remain at £500,000, as my hon. Friend the Member for South Thanet (Craig Mackinlay) proposed. We have to find that £8.3 billion annually, so we have to look at annual property taxes. The council tax system, under which people pay pretty much the same whether they live in a castle or a cottage, cannot be right. We need to revisit it and have a proper discussion about it. It is controversial. Some people think it is right that people who own bigger houses should pay more, and other people think it is wrong. We should certainly have a conversation about that.

The think-tank Onward recently proposed that there should be a council tax revaluation, and even the Prime Minister suggested back in 2014 that we should look at it. The thing about it is that it is simple. We can scrap stamp duty completely up to £500,000, and keep it at that level. We can also adjust the bands to make it cheaper for people in lower-value homes, to help people on lower incomes, and make it more expensive for people in higher-value homes.

It is simple, but it is not easy. Simple and easy are two completely different things. As Ronald Reagan said, there are simple solutions, but there are no easy solutions. If we are to tackle some of the unfairnesses in society, we must not duck the tough issues; we must look at the things that make the system unfair in the first place. This is an excellent measure, and I will support it tonight if we enter the Lobbies.

Finance Bill

Debate between Jesse Norman and Kevin Hollinrake

Report stage & Report: 2nd sitting & Report: 2nd sitting: House of Commons
Thursday 2nd July 2020 Commons Chamber

[Jesse Norman]

With permission, Madam Deputy Speaker, I will give way to my hon. Friend.

[Kevin Hollinrake]

I declare an interest as somebody who has benefited from entrepreneurs’ relief in the past. Is the Minister considering extending the reduction in entrepreneurs’ relief, which I support, to investors’ relief, which currently stands at the same figure as entrepreneurs’ relief used to stand at—£10 million?

[Jesse Norman]

If my hon. Friend is asking questions, he ought to stay for the next debate, because he is abusing the privilege of this debate. I thank him for his suggestion of a revenue-raising possibility for the Government; we take all those in great heart.

Finance Bill

Debate between Jesse Norman and Kevin Hollinrake

Report stage & Report stage: House of Commons & Report: 1st sitting & Report: 1st sitting: House of Commons
Wednesday 1st July 2020 Commons Chamber

[Kevin Hollinrake]

It is a pleasure to follow my hon. Friend the Member for Penistone and Stocksbridge (Miriam Cates), who made some very important points. She made the critical point that the digital services tax is a temporary, short-term measure, and we need something more encompassing to replace it. That is why I want to speak to new clause 33, which proposes a radical reshaping of how tax affairs would be disclosed. If we are going to tackle this fundamental problem, it is essential that we have country-by-country reporting. I therefore do not secretly support this new clause; I openly support it, even though it is not going to be pushed to a vote today. The principle behind the clause is absolutely right, and I pay tribute to my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) and the right hon. Member for Barking (Dame Margaret Hodge) for their work on it and in many other areas to tackle tax avoidance and corruption.

The other key element of the digital services tax is that it tries to level the playing field in corporation tax, but it does not level the playing field for business rates. That is a completely different discussion and it is one that we definitely need to have.

When I first came to the House, I attended one of those breakfasts; I think it was run by the Industry and Parliament Trust, of which I am a trustee. The subject of that seminar was the values of business—I have been in business for 30 years, and in my view business is a force for good in the vast majority of cases—and it was addressed by a vice-president of Kellogg’s, who talked about the values of business to the economy and the inherent values of some businesses. As examples, he talked about the great values and corporate social responsibility of businesses such as Facebook, Google and Amazon.

While the speaker was addressing us I googled, “Do Kellogg’s pay corporation tax in the UK?” My search came up with a Daily Mail article saying that Kellogg’s turns over £650 million in the UK and does not pay any corporation tax. When he got to the end of his comments, I asked him, “How can you square the circle—saying that you have great corporate social responsibility policies and put money into good causes in the UK, which might cost you a few pence or percentage points in terms of cost and contribution, when you are not paying corporation tax? Your customers are taxpayers. You are trading and turning over a significant amount of money in the UK. And yet you are not contributing back to the bills and the vital public services that your customers rely on. I think it is a cynical approach.”

This Kellogg’s vice-president was clearly quite stunned by my question. I quoted to him that Kellogg’s is one of those companies that does not pay corporation tax. When pressed for an answer, the only one that he could come up with was, “Well, we’ve got a duty to shareholders to minimise our tax burden.” That is an old chestnut. I hear lots of big shareholders of big companies in the US—people such as Warren Buffett—absolutely reject that notion. In my mind it cannot be right that businesses seek to avoid fair taxation rates in this world and, as many hon. Members have said, we have a duty to stand up for small and medium-sized enterprises that cannot benefit from these kinds of devices. The vast majority of us pay tax through pay-as-you-earn anyway, so we pay our fair share of tax—and most people do so willingly.

[Jesse Norman]

My hon. Friend raises an interesting point. Does he share my view—I think it is also the view of the people who really know the law in this area—that in Britain a corporation exists to maximise the interests of all its members, rather than merely the shareholders, and that the shareholder entitlement is to the residual that is left after satisfying other claims on the company?

[Kevin Hollinrake]

I absolutely agree. Any businessperson starts off on the premise that they have responsibilities not just to their shareholders, but to their customers and other stakeholders.

Due to the scale of the problem and the lack of country-by-country reporting, it is difficult to establish exactly what some of these companies are making in the UK, but let us look at Google as an example. In 2018, Google turned over $137 billion and had net revenues— so a profit—of $31 billion. The whole organisation internationally works on a profit margin of about 22%. The company turned over around $10 billion in the UK in the same year, and makes about $2.2 billion of profit from UK activities each year. If we applied 19% corporation tax to that amount, we would come up with a figure of £420 million in corporation tax that Google should have paid. It actually paid £67 million that year. This is happening on a huge scale and is multiplied by many other companies.

--- Later in debate ---

[Kevin Hollinrake]

I am surprised that my right hon. Friend says that this is not a method to try to bring companies that are avoiding tax to the tax table. The previous Chancellor, Philip Hammond, said in a speech that these measures would effectively insist that,

“global internet giants…contribute fairly to funding our public services.”

Is that not reflective of a position where he felt those companies were avoiding tax?

[Jesse Norman]

I think one could put it a slightly different way, which is to say, “You do not have to take a position on avoiding tax to come to the view that this is a base of tax revenue that has not been adequately taxed and should be taxed, and if you do follow that approach,” —here I will defer to the hon. Member for Wirral South (Alison McGovern)—“ipso facto you are going to be levelling the playing field to a degree.” Anti-avoidance measures are measures used in separate contexts to level the playing field as well.