Retailers: Business Rates

Debate between Lord Campbell-Savours and Lord Bates

Monday 8th April 2019 Lords Chamber

[Lord Bates]

Those businesses to which the noble Lord refers will have benefited from corporation tax falling from 27% to 19%—it is due to go down to 17%. It is also one of the reasons why, notwithstanding all the points highlighted by the noble Lord, levels of employment in this country are at a record high.

[Lord Campbell-Savours (Lab)]

My Lords, does the Minister believe that the relationship between the high street and online retailers is fair in terms of competition? This is a very simple question; it is either fair or not fair.

[Lord Bates]

Let me refer to a quote from the British Retail Consortium. It looked at this situation, and said:

“We fail to see how adding additional new taxes to the industry is really going to resolve the challenges we currently face”.

John Lewis said,

“this would actually have a detrimental effect … high streets need successful retailers with both a physical and online presence”.

I am not saying that this is easy and straightforward. It is complex, but the Government are seeking to come up with flexible solutions that address the concerns.

Tax: Short-term Lets

Debate between Lord Campbell-Savours and Lord Bates

Monday 1st April 2019 Lords Chamber

[Lord Campbell-Savours (Lab)]

We have a long-term rental licensing scheme whereby landlords have to register long-term lets. Why can the Government not devise a scheme for short-term lets on the same basis? That would help HMRC to gather the money due to it.

[Lord Bates]

It is an interesting idea. There is a scheme in Newham and there was one in Westminster. We are open to looking at whether more needs to be done. We also recognise however, that short-term letting—the Airbnb-type sharing economy—is filling a useful gap in the market. Schemes such as property allowances and Rent a Room exist to help people take advantage of it.

Online Marketplaces: VAT Evasion

Debate between Lord Campbell-Savours and Lord Bates

Monday 22nd October 2018 Lords Chamber

[Lord Bates]

My Lords, I congratulate my noble friend on his commitment and consistency in raising these very important issues which the Government recognise. That is why, for exactly the reasons he has outlined, we were the first country in the world to introduce joint and several liability for market sellers. We have issued more than 3,000 joint and several liability orders since they were introduced and the amount of tax revenue, which is the crucial point raised by my noble friend, is expected to increase to £1 billion over the review period leading up to 2023. However, more needs to be done.

[Lord Campbell-Savours (Lab)]

My Lords, are Ministers seriously considering any Treasury recommendations to increase the VAT threshold and thereby bring a lot more traders under the rules? Would that not increase the tax take substantially?

[Lord Bates]

There are other ways of approaching the issue, one of which is to crack down on the loopholes. We have introduced successive initiatives and we have spent some £2 billion for HMRC to cut down on evasion. Next April, we will bring in an important measure to address the point made by my noble friend Lord Leigh. It will require that due diligence is carried out on online marketplaces to ensure that people are actually paying the correct amount of tax. Our emphasis and focus is on closing the gap and ensuring that more people pay the tax that is due rather than looking at the rates.

Overseas Development Aid

Debate between Lord Campbell-Savours and Lord Bates

Tuesday 9th October 2018 Lords Chamber

[Lord Bates]

The noble Baroness will not be surprised to hear that I do not agree, and neither do I agree with the suggestion that the Secretary of State is being disingenuous. Far from it—I think she was very clear, although how those remarks have been interpreted is clearly another matter. So this is a good opportunity for us to make it absolutely clear that we are committed to the SDGs and to 0.7%. The DAC element counts only public sector investment, so it cannot count private sector investment towards the 0.7% target to which we are committed. But, as the noble Baroness and the noble Lord said, we are at one in recognising that you will not provide the 18 million jobs that Africa needs every year between now and 2050 without the private sector engaging with this. You will not bridge the $2.5 trillion gap in meeting the SDGs without getting the private sector involved. That is why the Secretary of State was absolutely right to say that we need to do more to leverage and catalyse that investment which the UK has an expertise in.

[Lord Campbell-Savours (Lab)]

My Lords, DfID projects have historically been subject to post-project evaluations for economy, efficiency and effectiveness—in other words, to make sure that we are not wasting public money. In the event that private investment were to be levered in, in the way that is being suggested—as I understand it, it would be within the 0.7%—what post-project evaluations would take place, not because it is public sector project money but to ensure that that investment meets overseas development criteria, and that it is not simply being attributed to overseas development criteria as a way of spending the money?

[Lord Bates]

An example is impact funds, many of which already exist within the City of London; many civil society groups and organisations such as the UN Global Compact scrutinise how that is accounted for in accounts. With the CDC it is a different process. We were quite specific when we discussed the raising of the threshold—the capitalisation of the CDC—as the legislation went through this House, that no investments could be made under that without a business case being prepared, which then has to be signed off and reviewed at the end of it to ensure that the outputs it was envisaged would be delivered were achieved, and if not, why not? These are therefore all important elements in the exploration of these issues. More can be done, but again, it needs to be done transparently.

Economy: Productivity

Debate between Lord Campbell-Savours and Lord Bates

Thursday 28th June 2018 Lords Chamber

[Lord Bates]

My noble friend makes a very interesting point. That was the premise on which we undertook the patient capital review and one premise on which we set up the British Business Bank, so as to offer that kind of long-term patient funding that allows businesses to grow and prosper.

[Lord Campbell-Savours (Lab)]

My Lords, what lessons did the Government learn from the very excellent paper produced by the noble Lord, Lord Heseltine, on industrial strategy? What decisions are they taking to implement some of its recommendations?

[Lord Bates]

My noble friend Lord Heseltine undertook a review for the Government on competitiveness in 2012, which was a key part of what fed into our industrial strategy. The point that he made is that it is absolutely critical that we leverage our technical research and that innovation becomes a core part of what we do going forward. We totally accept that and recognise we need to do more. That is why R&D investment from the public sector is at its highest level for 30 years and why we are investing £4 billion in aerospace research and development; it is all to take forward those types of policies.

Customs Clearance Arrangements at UK Ports

Debate between Lord Campbell-Savours and Lord Bates

Monday 19th March 2018 Lords Chamber

[Lord Bates]

Whatever we say, those are very profound statements made by people who are in the front line of protecting our borders and ensuring that we collect the duties and taxes due to us. That shows that it is possible. Moreover, we say that the whole trajectory of global trade is heading in a digital direction. We also believe that our approach as a Government is moving towards a digital tax system. We believe that this necessity will force further invention, which will mean that we can deliver this process to the benefit of our economy and productivity as a whole.

[Lord Campbell-Savours (Lab)]

If the Government are so confident that this arrangement in Northern Ireland will work, why do they not apply exactly the same arrangement to Dover? When the Minister talks about the system being frictionless at the moment and goods can go through, of course that is the case because there are no tariff requirements. When tariff requirements apply, the whole regime changes. What controls will exist in the case of trucks that come through this border that is proposed for Dover, where it might well be possible, because the entry is from the destination point, to unload the truck or the container en route, having already come through Dover, where the entry does not truly reflect the goods that are on the truck or in the container?

[Lord Bates]

The noble Lord raises a technical point. I am not in the front line of dealing with these issues. The people to whom my noble friend referred, who gave evidence to the Select Committee, are, and they seem to think that it is possible to do this and achieve these objectives. We should have confidence in them and in ourselves.

Budget: Reduction of Waste

Debate between Lord Campbell-Savours and Lord Bates

Tuesday 28th November 2017 Lords Chamber

[Lord Bates]

We launched the litter strategy for England earlier in the year. That has an ambition to ensure consistency in anti-littering across government, tough enforcement on those responsible for littering and an ambitious clean-up of our streets, highways and byways. The litter innovation fund was launched in August and it will be open to people to come forward with innovative ideas as to how we can implement that strategy. I think we are in a strong place as regards that.

[Lord Campbell-Savours (Lab)]

My Lords, in the Budget report there is reference to £30 million being allocated to the Environment Agency to deal with illegal waste management arrangements. Why is that money being allocated only to the Environment Agency and not to local authorities, when they are dealing with a huge problem nationally of illegal tipping, which is stripping out from local authorities funds that are preciously needed in other areas of environmental health?

[Lord Bates]

The noble Lord is absolutely right in saying that the Environment Agency takes the lead on that. The £30 million was committed to it and in 2015 we announced another £20 million to tackle waste crime, which costs local authorities, the taxpayer and business around £605 million a year. It is a very important part of this, the Environment Agency in England takes the lead on it and it is right that it should have the resources to tackle waste crime.

Finance Bill

Debate between Lord Campbell-Savours and Lord Bates

3rd reading (Hansard): House of Lords & Committee: 1st sitting (Hansard): House of Lords & Report stage (Hansard): House of Lords
Wednesday 15th November 2017 Lords Chamber

[Lord Bates]

My Lords, I thank all noble Lords for their contributions in this short but very helpful debate, which was significantly strengthened, as many noble Lords said, by the excellent report on making tax digital prepared by the sub-committee, which I again pay tribute to. There were, rightly, some concerns about consultation and the steps which have been taken. My noble friend Lord Wakeham, although very generous towards me personally, then lulled me into a false sense of security by reminding me of the limitations of consultation. As he was saying that, I was thinking back to a text that used to be above the kitchen steps in my parents’ home, from Proverbs 16, verse 18:

“Pride cometh before a fall”.


I certainly do not want to go down that route, but we in your Lordships’ House can be proud of the contribution that it has made in terms of improving the way in which these measures have been introduced.

In no particular order, I will try to address some of the issues in the time that I have available. The noble Baroness, Lady Kramer, asked how we expect the process of making tax digital to bring in more tax. In 2014-15, more than £3.5 billion was lost due to mistakes in VAT tax returns alone, and the Office for Budget Responsibility will certify costings for the revenue programme and how yields from taxation are forecast to increase in the course of the Budget.

The noble Baroness also said that not enough action was being taken to dissuade tax avoiders. Clause 65 and Schedule 16 introduce a new penalty for any person who enables the use of tax avoidance arrangements which are later defeated by HMRC. Tax avoiders face significant financial costs when HMRC defeats them, but those who enable them to bear little risk; they gain financially as their clients foot the bill. One of the purposes of this legislation is to tackle that injustice.

The noble Baroness asked whether there would be a general anti-avoidance rule rather than a general anti-abuse rule. The Government are legislating on the general anti-abuse rule, drawing on the recommendations of an independent expert study group led by Graham Aaronson QC. It is robustly founded. The Bill takes forward a number of specific and significant provisions that will tackle areas of tax avoidance.

My noble friend Lord Leigh referred to some of the issues raised by the committee’s report, and raised concerns regarding the administrative burden of making tax digital for VAT. As VAT already requires quarterly digital returns, no business will need to provide information to HMRC more regularly that it does now; nor will it need to provide extra information.

The noble Baroness, Lady Kramer, mentioned the difficulties of filling in VAT tax returns, and I can empathise with that, having filled them in myself. It is a tortuous process. But digitisation of this, we believe, can actually make tax recording simpler in the long term by making use of the technology that is available.

My noble friend Lord Leigh also asked about spreadsheets. Businesses can continue to use spreadsheets as part of maintaining digital records and performing tax calculations to meet making tax digital requirements. Any business choosing to keep its digital records in performing tax calculations using spreadsheets must ensure that it meets the making tax digital requirements, including automatically sending the required digital updates and other recording to HMRC. As part of the pilot started earlier this year, HMRC has already received the first update from someone keeping their records on a spreadsheet. It is also worth saying, more generally, that the Government will not force the system on anyone who cannot handle it—a point which the noble Lord, Lord Turnbull, rightly led on. Indeed, 3 million businesses under the VAT threshold will be able to move forward towards making tax digital at a pace that works for them. Even larger businesses will be asked to use making tax digital for VAT only from 2019.

My noble friend also brought the attention of the House to Clauses 48 to 59 on fulfilment houses and the previous Finance Act 2016 provision that allows HMRC to make online marketplaces jointly and severally liable for the unpaid VAT of their non-EU sellers. Together, this package of measures, first announced in the Budget, is expected to raise £875 million by 2021.

I, too, enjoyed the contribution of the noble Lord, Lord Campbell-Savours; it was a thoughtful contribution on the wider issue of taxation. It was nice to see cross-party consensus between him and my noble friend Lord Leigh. The noble Lord, Lord Davies, also mentioned talking more about the principles of taxation, and I agree.

The noble Lord asked whether inheritance tax should be paid by the beneficiary rather than from the estate. This would be a very large-scale reform, with significant impacts across a wide range of situations and would need careful consideration. He raises the example of Germany. That was not one that I was aware of, but I am keen to look at that. The Government keep all taxes under review, and I will ensure that the noble Lord’s remarks are brought to the attention of my colleagues in the Treasury.

The noble Lord, Lord Turnbull, asked when a revised impact assessment will be published. It will be released shortly, following the Budget. He also asked whether there will be at least one year of systems testing before introduction. The making tax digital for VAT pilot will commence by the end of the year, starting with small-scale technical testing, followed by a wider live pilot in the spring. This will allow for more than a year of testing before any businesses are mandated to use the system, and testing of all MTD elements and processes. I hope he will feel that that is a step towards what he was asking for.

[Lord Campbell-Savours]

The Minister referred to the specific issue of inheritance tax, but what about stamp duty?

[Lord Bates]

I was coming to that.

[Lord Campbell-Savours]

Fair enough. I thought he had dealt with me—that was all. Forgive me.

[Lord Bates]

I would never be so pompous as to pretend that I should deal with the noble Lord, but I shall certainly be responding to his comments. I said earlier that because I have not been able to sort my papers into chronological order, I was just taking them as they came, but I will certainly come to his point on stamp duty.

The noble Lord, Lord Turnbull, asked about businesses that have difficulty in engaging digitally. The noble Baroness, Lady Kramer, also referred to this. The Government have been clear from the outset that those businesses which are unable to go digital will not be required to do so. We are legislating to exempt taxpayers who cannot engage digitally. All businesses currently digitally exempt for VAT will continue to be so under MTD. This will be based on existing VAT online filing exemptions, which stakeholders have recognised as a sensible definition.

I turn now to the question raised by the noble Lord, Lord Campbell-Savours, about whether the stamp duty surcharge was harming the market and should be reformed. He referenced a report by Newham Council. I have not seen it, but I will certainly make sure that it is drawn to colleagues’ attention. Since 1 April 2016, higher rates of stamp duty have been charged on purchases of additional residential properties, such as buy-to-let. This is part of the Government’s commitment to supporting home ownership, alongside other measures on both the supply and demand side of the market. This Government keep all taxes under review.

I thank the noble Lord for his contribution. He asked specifically about Newham, which is an issue that the Government take seriously. HMRC reduced the tax gap in 2015-16 to an historic low. On the time-specific matter raised by the noble Lord, I shall be happy to write to him and endeavour to answer his questions on the Newham experience. That applies to all other points raised by noble Lords which I may not get the chance to cover in my remarks.

My noble friend Lord Wakeham asked about the wider lessons for HMRC’s consultation arrangements. I was almost tempted to say that I would be delighted to invite him back to his former parish at the Treasury where he could meet us and talk about the consultation exercise. I think that that would be a very good thing, so I put it on the record, and my colleagues will ensure that that happens. He talked about the informal conversations and people talking through particular problems. That would be helpful. There are standard guidelines on how consultations are now supposed to be undertaken in operation across government, and there are areas where that could be improved.

The decision to move to a single, annual autumn Budget allows more time to consult before tax changes take effect. The Government have made significant commitments to improve tax policy-making since 2010, and we remain committed to them. On a point raised by the noble Lord, Lord Davies, I recognise that the Bill is a very substantial piece. He rather unkindly referred to parts of it being somehow dealt with in the wash-up before the general election.

There is a general point here. I know that there is always a tension: do you make changes explicit in law, and therefore run the risk of criticism for producing a Bill of 664 pages, or do you establish general principles? Because that often leads to contested cases going through the courts, trying to determine what was in the mind of the legislators, we recognised that we should try to be explicit about our intentions wherever possible. We are introducing some significant changes, and 70% of the clauses in this Finance Bill were announced prior to the spring Budget in 2017 and consulted on extensively. Effectively, we will continue that discussion, including through the publication of draft legislation. There are over 390 pages of draft legislation: 98 clauses and 22 schedules were published for technical consultation in December 2016. Further draft legislation was published for technical consultation in January 2017: seven clauses and six schedules in over 200 pages of new draft legislation.

The noble Lord, Lord Leigh, asked about the Office of Tax Simplification, which was established by the Government last year, and placed on a statutory footing. It is dedicated to reducing tax compliance burdens on both businesses and individual taxpayers. It investigates where the tax system is overly complex and advises government on how to reduce that complexity.

I am conscious that time is moving on and that I have addressed a number of the points raised by noble Lords, though not all. A number of the points were worthy of more detailed consideration so, with the leave of the House, I undertake to reflect on the debate, which has been thoughtful and of a very high quality, and to write, perhaps following the Budget, to update colleagues as we go forward. With that, I commend the Bill to the House and beg that the House grant this Bill a Second Reading—or words to that effect.