Taxation: Avoidance and Evasion

Lord Wigley Excerpts

Tuesday 26th January 2016 Lords Chamber

[Lord Ashton of Hyde]

I am grateful for the sympathy of the noble Baroness and the noble Lord but I do not think that I need it today. The fact is that HMRC has taxed the full amount of UK taxable profits at the statutory corporation rate. One of the reasons why this country is attracting inward foreign investment is that it has a rule of law and treats people according to the rules.

[Lord Wigley (PC)]

My Lords, I add my voice to that of the noble Lord, Lord Crickhowell, who emphasised the strength of feeling among small businesses, which pay their tax honourably and on time, when they see the fat cats getting away with it in this manner. Have the Government considered introducing turnover tax as an alternative to corporation tax, in circumstances where such companies are shuffling their corporation tax to other countries? A turnover tax is something they could not avoid.

[Lord Ashton of Hyde]

The noble Lord puts his finger on an interesting question. At the moment, as I said, it is a corporation tax based on taxable profits. It has never been done on turnover but what we are doing is making sure that taxable profit rests in the country where the economic activity takes place. That is why we introduced the diverted profits tax. However, I note that the Treasury Select Committee has agreed terms of reference to look at the corporate tax base.