Asked by: Lord Kennedy of Southwark (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what recent assessment they have made of business rates and the case for reform.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
The Government recently undertook a full review of the business rates system. The Final Report of the Business Rates Review was published at Autumn Budget 2021. The report reaffirmed the importance of business rates as part of the UK tax system, particularly as they raise around £20 billion a year to fund vital local services. As part of this Review the Government committed to more frequent revaluations from 2023, a major reform to the system ensuring that business rates liabilities are more responsive to changing market conditions. This addresses a key ask of stakeholders for more frequent revaluations and to reduce the burden of business rates to make the system fairer.
At Autumn Statement 2022, the Government announced a package of changes and tax cuts worth £13.6 billion over the next five years. The package contains new measures to reduce the burden of business rates on firms, including a freeze in the multiplier, extended relief for high street businesses, and a new Exchequer funded Transitional Relief scheme to help ratepayers adapt to their new bills.
The Government keeps all taxes under review.
Asked by: Lord Kennedy of Southwark (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what recent assessment they have made of self-assessment as a mechanism for ensuring the collection of all taxes owed to HMRC.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
Over £100 billion of tax receipts in 2021-2022 were received through Income Tax Self Assessment and Corporation Tax Self Assessment.
Individuals and businesses with taxable income that has not already been fully taxed at source are required to report that income and pay the tax due through the Income Tax Self Assessment system. Companies self-assess their tax liabilities and pay their tax through the Corporation tax self assessment system.
HMRC has the power to check self-assessed tax liabilities, investigate and assess further tax if necessary.
HMRC monitors the effectiveness of Self Assessment in a variety of ways, including the annual measurement of tax receipts and through estimates and analysis of the tax gap. HMRC also engages with taxpayers and their representatives at a variety of customer and agent community forums such as the Admin Burden Advisory Board, the Individual Stakeholder Forum and the Business Tax forum.
Asked by: Lord Kennedy of Southwark (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what plans they have to increase the number of tax compliance investigations.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
HMRC closed 256,000 civil compliance checks in 2021-22, up from 248,000 the previous year. Compliance yield fell during the pandemic as we reprioritised work recognising the challenges faced by individuals and businesses. Any compliance risks that we did not pick up during the Covid period are still there and available for us to work.
The most efficient way to get tax right across 45 million individuals and 5 million businesses is for HMRC to guide the taxpayer by intervening before anything has the chance to go wrong. That includes things like prompts built into the online Self Assessment System, which flag when a customer’s entry is out of line with what is expected. It also includes creating policies that make it easy for people to do the right thing and in a way that makes some historical forms of non-compliance nearly impossible.
HMRC’s approach is underpinned by cutting-edge data analysis, which we use to identify where tax is most at risk of not being paid and design tailored, targeted and proportionate interventions to address it. A ‘compliance check’ allows us to investigate someone’s tax affairs if we think they may not be paying the right amount of tax.
The Government continues to invest in HMRC to ensure the right amount of tax is paid. For example, new measures were announced at the Autumn Statement 2022 which are forecast to raise £1.7 billion in tax revenue over the next five years.
Asked by: Lord Kennedy of Southwark (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government how many criminal prosecutions for tax offences have been undertaken by HMRC each year since 2010 up until the last year for which records are available.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
Financial Year | Prosecutions |
2011/12 | 449 |
2012/13 | 576 |
2013/14 | 761 |
2014/15 | 709 |
2015/16 | 880 |
2016/17 | 887 |
2017/18 | 917 |
2018/19 | 749 |
2019/20 | 691 |
2020/21 | 163 |
2021/22 | 236 |
Total | 7372 |
The information provided above shows the number of prosecutions resulting from HMRC criminal investigations since the start of the 2011/2012 financial year - when the Department’s assured data begins.
However, HMRC is not a prosecuting authority. Cases are prepared to the highest evidential standard and passed to the relevant prosecuting authority, who decide if a case progresses to court.
HMRC is therefore reliant on the prosecuting authorities and the criminal justice system to progress cases to conclusion. This is a lengthy process and outcomes achieved in any given year are not necessarily reflective of HMRC’s activity in the same period.
The number of prosecutions has fallen over the last three years. There are a number of contributing factors here, including ongoing delays within the courts system due to the pandemic, and HMRC’s strategic choice to focus on harder-to-reach targets and tackle the most serious frauds.
Prosecutions represent one element of a wide-ranging HMRC response to tax fraud, which also includes civil investigations and sanctions, data and intelligence analysis, risk detection and profiling, education, legislative change, partnering with the public and private sectors, and target-hardening of our systems and processes.
In practice, the Department focusses interventions where they have most impact, an approach which is about reaching the right outcome for the UK, rather than chasing arbitrary targets for arrests and prosecutions.
Most of HMRC’s work to tackle tax fraud makes use of civil powers because these are the most proportionate, economical and effective way to recover monies owed and tackle fraud; as such, criminal investigations are focused on cases which meet certain criteria to ensure they deliver both value for money for the taxpayer and the maximum impact on tax fraud.
Asked by: Lord Kennedy of Southwark (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of the (1) operation, (2) benefits, and (3) risks, of (a) Non-Fungible Tokens (NFTs), and (b) the wider blockchain.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
The Government established a Cryptoassets Taskforce in 2018, consisting of HM Treasury, the Bank of England and the Financial Conduct Authority (FCA). The Taskforce’s objectives include exploring the impact of cryptoassets, the potential benefits and challenges of Distributed Ledger Technology (DLT, which includes blockchain technology) in financial services; as well as monitoring ongoing developments in cryptoasset markets.
These crypto technologies could have a profound impact across financial services, including reducing risk, working capital, and disintermediating friction. However, there are also associated risks. As the Bank of England’s Financial Policy Committee noted, as crypto technologies grow and become more interconnected with the core financial system we’ll need to ensure that regulators have the right tools to manage the associated risks. That is why the Government is taking forward a number of regulatory initiatives to manage risks and support innovation so that people and businesses can use new technologies both reliably and safely.
The Government is putting in place a Financial Market Infrastructure (FMI) Sandbox, which will enable firms to experiment with the use of new technologies like DLT in providing the services that underpin financial markets. The Government is also exploring the possible use of DLT in the issuance and lifecycle of a sovereign debt instrument. Further details on this research programme will be set out in due course.
The non-fungible tokens (NFTs) market is evolving rapidly and remains at an early stage of development. Most NFTs are not currently subject to financial services regulation in the UK and the Government has proposed to exclude them from the financial promotions regime on the basis that NFTs can represent a wide array of different assets which might constitute non-financial services products. The Government will continue to closely monitor how NFTs are used in financial services and take further action if necessary.
Asked by: Lord Kennedy of Southwark (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what steps they are taking to ensure that the five pence per litre cut to fuel duty is passed on to consumers.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
The Government has been clear that it expects all those in the supply chain to pass the fuel duty cut through to consumers in full.
In June, the Business Secretary requested that the independent Competition and Markets Authority (CMA) undertake an urgent review of the market for road fuel. The CMA’s initial findings suggest that the fuel duty cut appears to have been largely passed through, with the largest fuel retailers doing so immediately and others more gradually.
The Government fully supports the CMA in its further work to better understand the supply of the road fuel in the UK, and will await these findings.
Asked by: Lord Kennedy of Southwark (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what price petrol and diesel would need to reach in order to prompt them to further cut fuel duty.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
The temporary 12-month cut to duty on petrol and diesel of 5p per litre represents a £2.4 billion tax cut in 2022-23.
All taxes, including fuel duty, remain under review.
Asked by: Lord Kennedy of Southwark (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government how many individuals in each local authority declared income from furnished holiday lettings on their Self-Assessment tax returns in the latest year for which data is available.
Answered by Lord Agnew of Oulton
The numbers of individuals in each local authority that declared income from furnished holiday lettings via their self-assessment tax returns in 2019-20, rounded to the nearest 10 are provided in the attached table.
It should also be noted that:
- Not all individuals with property income are required to declare it. For example, those with income below the £1,000 property allowance are not required to tell HMRC.
- Some individuals with property income between £1,000 to £2,500 will declare this via PAYE rather than self-assessment. These individuals are not included here.
In March, the Government announced that it will legislate to change the criteria determining whether a holiday let is valued for business rates to account for the number of days it was let. This will ensure that owners of properties cannot reduce their tax liability by declaring that a property is available for let while making little or no actual effort to do so. Further details of the change and implementation will be included in the Ministry for Housing, Communities and Local Government’s (MHCLG) response to the consultation on the business rates treatment of self-catering accommodation which will be published shortly.
Asked by: Lord Kennedy of Southwark (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government how many individuals in each local authority declared income from property, excluding furnished holiday lettings, on their Self-Assessment tax returns in the latest year for which data is available.
Answered by Lord Agnew of Oulton
The numbers of individuals in each local authority that declared income from property excluding furnished holiday lettings via their Self-Assessment tax returns in 2019-20 are provided in the attached table, rounded to the nearest 10.
It should also be noted that:
In March, the Government announced that it will legislate to change the criteria determining whether a holiday let is valued for business rates to account for the number of days it was let. This will ensure that owners of properties cannot reduce their tax liability by declaring that a property is available for let while making little or no actual effort to do so. Further details of the change and implementation will be included in the Ministry for Housing, Communities and Local Government’s (MHCLG) response to the consultation on the business rates treatment of self-catering accommodation which will be published shortly.
Asked by: Lord Kennedy of Southwark (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what plans they have to raise the issue of relief of poorer income countries’ indebtedness to banks and other private creditors (1) at the meeting of G7 finance ministers, and (2) in discussions with other international partners.
Answered by Lord Agnew of Oulton
The UK secured strong commitments on international debt from its G7 partners in the G7 Finance Ministers communique[1]. G7 Finance Ministers reiterated their commitment to implement the G20 and Paris Club Common Framework for Debt Treatments beyond the Debt Service Suspension Initiative and set out their expectation that private creditors will provide at least as favourable debt treatments in line with the Common Framework. They noted the importance of debt transparency for debt sustainability and committed to publish their own creditor portfolios on a loan-by-loan basis for future direct lending by end of 2021 They also welcomed the establishment of a G7 Private Sector Working Group.
We continue to raise the importance of these issues with other international partners including at the G20, Paris Club and the Boards of the IMF and World Bank.
[1] FMCBGs_communique_-_5_June.pdf (publishing.service.gov.uk)