Tax Avoidance, Evasion and Compliance

Jonathan Reynolds Excerpts

Monday 4th March 2019 Commons Chamber

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

The Opposition came to Parliament today prepared to debate, to amend and to scrutinise the Financial Services (Implementation of Legislation) Bill, and we did so in good faith, even though we were given just three hours to table amendments to the Bill last week, having been told on Wednesday afternoon that the remaining stages would be taken today. I should make it clear that the Bill had only come out of Committee the day before, on Tuesday, and that the business for this week was announced only last Thursday.

Let me be absolutely frank. The Bill has been pulled, and this statement scheduled instead, for one simple reason: the Government thought that they were going to lose. They have shown such contempt for Parliament today, and they are in such a state of chaos, that even the annunciator could not keep up with them this morning. This is not a statement from the Government on tax avoidance; it is a poor attempt to put up something that the Government can hide behind, because they are afraid to let Members of Parliament vote on the provisions of the Financial Services (Implementation of Legislation) Bill.

There were two main amendments to the Bill. The first would have prevented the Bill from legislating for a race to the bottom in regulatory standards if we were to crash out of the EU without a deal—something that the Government say they are already committed to. The second, standing in the names of my right hon. Friend the Member for Barking (Dame Margaret Hodge) and the right hon. Member for Sutton Coldfield (Mr Mitchell), would have compelled the introduction of public registers of beneficial ownership in the Crown dependencies and reiterated their introduction in the overseas territories—something that the Government are already committed to doing. It is woeful and embarrassing for the Government to pull the business of the House today, to avoid Parliament having a say on those amendments, and to make this statement instead.

In relation to the substantive point on tax evasion that has led to this, I know that the Crown dependencies have a difference of opinion with this Parliament on the merits of public registers of beneficial ownership, but I believe that there is a majority view in Parliament that public registers provide for greater transparency than the existing data-sharing protocols between ourselves and the Crown dependencies provide for. Public scrutiny would provide for analysis of suspicious patterns of behaviour, and it would disclose inconsistencies in supposedly factual information and reveal wrongdoing by people who might not already be the subject of official law enforcement action. Around the world, such information getting into the public domain has been essential to exposing tax evasion and corruption, from the laundromat scandal to the Panama papers, and the public want to see action.

In relation to what the Minister has said today, all I can ask him is whether his reference to not enforcing historic cases is code for the Government not proceeding with the 2019 loan charge? His words suggested that they might not be proceeding, but he did not really say one way or another. If the answer is that they are not proceeding, I am not really sure, with all due respect to the Minister, why he needed to make a statement today at all.

Let me return to the main point. If we had debated the Financial Services (Implementation of Legislation) Bill today, I had intended to start with a genuine word of solidarity with my opposite number, the Economic Secretary to the Treasury, who is also the MP for Salisbury, because it is exactly a year since the appalling attack in his constituency that featured chemical weapons. I still want to take this opportunity to express our support and solidarity with him and the people of his constituency. I mention this now because the House has united on a cross-party basis to push for new laws in this area precisely because transparency in overseas jurisdictions has become an issue of national security for us in the UK. We cannot, and should not, tolerate those who threaten the safety of our people being able to hold major assets in the UK through complex and opaque financial arrangements.

In the light of that, the Government’s words today are simply not good enough. If there is consensus in this House that action must be taken now, how can the Government deny us the chance not only to vote for further action but to vote to reaffirm the action that we have already passed through the House of Commons? Real action on tax avoidance, transparency and money laundering is well overdue, and if the Government cannot bring themselves to take that action, they should at least stop preventing other Members of Parliament from getting on with the job.

[Mel Stride]

I thank the hon. Gentleman for his reply. He spent some time focusing on the legislation that was due to come before the House this evening. Some amendments have been tabled, particularly the second one to which he referred, that could have significant constitutional ramifications for our Crown dependencies and overseas territories. For that reason, and given that the amendments were tabled only last Thursday, it is only right that we should have time to consider these important matters. They are not directly Treasury matters; they are more a matter for the Foreign and Commonwealth Office and the Ministry of Justice.

The hon. Gentleman refers to wanting to see public registers of beneficial ownership of companies, but he neglected to mention that we have already introduced these in respect of UK companies. That came in in 2016, and that database has been accessed in excess of 2 billion times. He mentioned that we have already made commitments to work with the overseas territories to bring in those measures by 2023. He asked me specifically what the meaning was, in the context of IR35, of focusing particularly on future compliance rather than on the history of the businesses that would be in scope of this measure. This is simply a clear indication that this is not about trawling through previous activities. It is about looking to the future and ensuring that we take a fair, proportionate and reasonable approach to IR35 as it goes into the private sector.

The hon. Gentleman asks me whether there were any implications for the loan charge. I know that people often conflate IR35 and the loan charge in relation to disguised remuneration, but as he will appreciate, they are entirely different things. There is no implication in any element of my statement on any change in respect of the loan charge.

The hon. Gentleman makes an important point, in relation to our national security, about the importance of general transparency in business and tax affairs internationally. I remind him that this Government and this country have been at the forefront of the base erosion and profit-shifting project with the OECD and that it is this country that has helped to drive our common reporting standards, which provide information across hundreds of overseas tax jurisdictions. With that, I will conclude, because I think that I have addressed the points that the hon. Gentleman has raised.