Paradise Papers

John McDonnell Excerpts

Monday 6th November 2017 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

(Urgent Question): To ask the Chancellor of the Exchequer if he will make a statement on the Government’s actions to curb aggressive tax avoidance schemes in the light of the Paradise papers revelations.

[The Financial Secretary to the Treasury (Mel Stride)]

The Government believe in a fair tax system where everyone plays by the rules. It is this Government who have taken decisive action to tackle tax avoidance and evasion and to improve the standards of international tax transparency. The UK has secured an additional £160 billion in compliance revenue since 2010—far more than was achieved under the last Labour Government. Under this Government, the UK now has one of the lowest tax gaps in the world. We have provided Her Majesty’s Revenue and Customs with tough new powers. In 2015, HMRC received £800 million in additional funding to go on tackling tax avoidance and evasion.

Let me turn to recent events. Yesterday evening, several international news organisations, led by the International Consortium of Investigative Journalists, reported on an information leak regarding the financial affairs of a large number of individuals. I should remind the House at this stage that Ministers do not intervene in the tax affairs of individuals or businesses, as to do so would be a breach of taxpayer confidentiality. However, I can inform the House that, on 25 October, HMRC requested that the ICIJ, The Guardian and the BBC share the leaked data so that this information can be compared with the vast amounts of data that HMRC already holds due to the initiatives this Government have undertaken. They have yet to respond to this request.

Nevertheless, since these data were retrieved in 2016, the Government have implemented international agreements that have changed the game for those seeking to avoid and evade their taxes. HMRC is already benefiting from the automatic exchange of financial account information through the common reporting standard—an initiative in which the UK has led the world, with over 100 jurisdictions signed up. The Crown dependencies and overseas territories are among those signed up to this initiative, and have been exchanging information with HMRC for over a year. The Crown dependencies and overseas territories have also committed to holding central registers of beneficial ownership information, which the UK authorities are able to access.

It is important to note, and I quote the ICIJ’s disclaimer here:

“There are legitimate uses for offshore companies and trusts”

and the ICIJ does

“not intend to suggest or imply that any people, companies or other entities included in the ICIJ Offshore Leaks Database have broken the law or otherwise acted improperly.”

So, notwithstanding the generalised aspersions made by the Opposition, the use of offshore accounts or trusts does not automatically mean dishonesty. But this House should be assured that, under this Government, HMRC will continue to bear down with vigour on any tax avoidance or evasion activity, wherever it may be found.

--- Later in debate ---

[John McDonnell]

Unless there is a critically overriding reason, I believe the House will consider it unacceptable that the Chancellor is not here to address the biggest tax scandal of this generation.

The Minister’s response today was the same bluster. He cites a figure for additional tax revenues that cannot be verified from any publically available data. He refers to a tax gap that does not include the likes of Apple, Facebook, Google and others. He boasts of this Government’s efforts to address avoidance, yet last week they voted to protect non-doms in the Finance Bill. Last month, the European Parliament accused this Government of obstructing the fight against tax avoidance evasion and even money laundering. Does he not appreciate the outrage in our community at this tax dodging? Every pound in tax avoided is a pound taken away from our NHS, our children’s education, and care for the elderly and the disabled.

Given that the chairman of the Conservative party and Chancellor of the Duchy of Lancaster is responsible for administering

“the estates and rents of the Duchy of Lancaster”,

has the Chancellor or any Minister discussed these revelations with the Chancellor of the Duchy of Lancaster, the right hon. Member for Derbyshire Dales (Sir Patrick McLoughlin), and will the right hon. Gentleman be apologising to Her Majesty for the embarrassment this episode has caused her?

With regards to Lord Ashcroft, a major funder of the Conservative party who reportedly contributed half a million pounds to the Conservatives in the general election campaign, will the Minister tell the House what information he has had about the domicile status of Lord Ashcroft between 2010 and 2015, and whether Lord Ashcroft was paying taxes on his overseas wealth?

The Chancellor now has an immediate opportunity to tackle tax avoidance. Can he assure the House that in the forthcoming Budget he will adopt Labour’s proposals to remove exemptions from non-doms and secure full transparency of trusts? Will he now also agree to Labour’s proposals to establish an independent public inquiry into tax avoidance? I tell the Government this: if they refuse to act, the next Labour Government will.

[Mel Stride]

The right hon. Gentleman raises the veracity or otherwise of our figures. We have collected £160 billion through clamping down on avoidance, evasion and non-compliance. That is a figure that he will find broken down and indeed published in Her Majesty’s Treasury’s annual report and accounts.

The right hon. Gentleman refers to Lord Ashcroft. As I said in my opening remarks, I am clearly not going to start getting into the individual tax affairs of any particular individual, regardless of their political allegiance or whoever they may be.

The right hon. Gentleman raises non-dom status and non-doms, and the measures that he and his party put forward for the most recent Finance Bill. Can I remind him of two things? It is the Conservative party that has put an end to permanent non-dom status, and it was Labour that sought, by voting against that Bill on Third Reading, to stop that from happening.