Taxpayer Confidentiality

Lord Dubs Excerpts

Monday 14th March 2016 Lords Chamber

Asked by

[Lord Dubs]

To ask Her Majesty’s Government what is the public benefit of taxpayer confidentiality for businesses and private individuals.

[Lord Ashton of Hyde (Con)]

My Lords, taxpayer confidentiality is key to the effective operation of the tax system. Taxpayers have confidence that the sensitive information that they give to HMRC will be protected and this trust underpins the high levels of voluntary tax compliance that the UK enjoys. The public benefit of taxpayer confidentiality lies in the overall effectiveness of the tax administration that it significantly supports.

[Lord Dubs (Lab)]

My Lords, with all due respect, I cannot for the life of me understand the Minister’s Answer. Surely we have to seek the right balance between confidentiality and integrity in our tax system. Transparency in our tax returns would add to the integrity of the tax system and ensure that HMRC had an easier job to do. I suspect that most Members of this House pay more in income tax than Facebook does.

[Lord Ashton of Hyde]

My Lords, I agree with the noble Lord that there is a debate to be had about greater transparency, whether on the part of HMRC or on the part of large businesses. The Government have signalled this by recently proposing to take forward a system of country-by-country reporting for large businesses on a multilateral basis. But we think that there are good reasons for having confidentiality within which transparency can work. It promotes trust and voluntary compliance and it encourages businesses to be more open and to share proprietary information with the tax authorities.

--- Later in debate ---

[Lord Ashton of Hyde]

My Lords, I am very pleased to answer my noble friend’s point. It is a good opportunity to pay tribute to the people who work in HMRC, who do a fine job. In fact, last year HMRC raised more tax than it has ever done in its history.

[Lord Dubs]

My Lords, would not HMRC have an easier job to do if there was more transparency? Surely it is the air of confidentiality and secrecy that enables people to get away with things that they would not if everything were in the public domain.

[Lord Ashton of Hyde]

My Lords, as I think I said earlier, we agree that there is a debate to be had about transparency. That is why the Government have already proposed to take forward a system of country-by-country reporting on tax payments from multinationals. The Chancellor asked that that should be made public. We are publishing details of avoidance schemes and of deliberate tax defaulters. Following consultation last year, large businesses will be required this year to publish details of their tax strategy.