Tax Avoidance, Evasion and Compliance

Debate between Mel Stride and Robert Neill

Monday 4th March 2019 Commons Chamber

[Mel Stride]

The hon. Lady asks about when today’s business will return to the House. That will be a matter for the business managers and the usual channels in the usual way. She asks about the loan charge and, specifically, about those who would be impacted by it, and I can tell her that, of the £1 billion that has been received by HMRC via pre-loan charge settlements, some 85% of those settlements by value came from companies, rather than from individuals. HMRC will go for companies in the first instance.

The hon. Lady raises the issue of HMRC offices up and down the country. We are going through a transformation programme, as she will know, reducing the number of offices from 170, some of which had fewer than 10 staff, to produce 13 state-of-the-art hubs that will move our tax authorities into the 21st century, and so much more can be done through analysis, computers and intelligent interventions. I was privileged last week to visit our new office in Bristol, which will be the hub for the south-west of England. It is a truly stunning building that will house a state-of-the-art approach to tax collection.

The hon. Lady mentions Scottish limited partnerships and urges the Government to act. She will know that we have already taken action in that respect. The main point remains that we have been successful in keeping our tax gap as one of the lowest in the world, safeguarding and protecting some £200 billion of tax, which, let us not forget, is there for a purpose. Taxes support our vital public services, our doctors, our nurses, our brave servicemen and women, and our police force. We need that money, and that is why I am proud of our achievements in that area.

[Robert Neill (Bromley and Chislehurst) (Con)]

My right hon. Friend is right to say that the best approach is to get things right for the future, rather than to overemphasise enforcement of the past, particularly when people may well have acted in good faith when they received professional advice. That takes me to the loan charge and I will press the Minister on that. The Government accepted a new clause to the Finance Act 2019 relating to a review of the loan charge. For that to be meaningful, it must have an independent element and must be given time to do its work. Would not common justice indicate that the sensible thing for the Revenue to do would be to use its discretion to suspend the implementation of the loan charge against individuals until the review has been fully completed and its conclusions fully digested and debated?

[Mel Stride]

During the passage of the Finance Bill, we committed to provide a report by 30 March, which is shortly upon us and, of course, is prior to the moment when the loan charge will come into effect, which is at the beginning of the coming tax year. My hon. Friend referred to whether individuals getting involved in such schemes knew what they were all about, but if something looks too good to be true and one ends up being asked for basically no or little tax, it probably does not work and that, I am afraid, is the case.

Financial Services (Implementation of Legislation) Bill [Lords]

Debate between Mel Stride and Robert Neill

2nd reading: House of Commons & Money resolution: House of Commons & Programme motion: House of Commons & Ways and Means resolution: House of Commons
Monday 11th February 2019 Commons Chamber

[Mel Stride]

I think this is an example of Parliament carrying out its process and legislation being improved as a consequence. The most important point is where we have ended up. Having listened to the arguments put forward in the other place, the Government chose to embrace the amendments that brought those two particular files into the scope of the Bill.

The Bill provides a mechanism through which the UK will be able to implement in-flight financial services legislation. They fall into two categories. The first category of files relates to those that have been agreed while we have been a member of the European Union, but will not apply or be in force prior to the UK’s exit from the EU on 29 March. In a no deal and in the absence of the Bill, there would be no effective way to implement those files in a timely manner, as each would require primary legislation. The Bill allows the Government to domesticate each of these files in whole or in part via an affirmative statutory instrument. It further provides a power to fix deficiencies within them.

[Robert Neill (Bromley and Chislehurst) (Con)]

Will my right hon. Friend give way?

[Nicky Morgan (Loughborough) (Con)]

Will my right hon. Friend give way?

[Mel Stride]

I will give way first to my hon. Friend the Member for Bromley and Chislehurst (Robert Neill), but wait with great anticipation for the intervention of my right hon. Friend the Member for Loughborough (Nicky Morgan).

[Robert Neill]

I am very grateful to my right hon. Friend for giving way. I entirely support the thrust of what is sought to be done here, as does the financial services sector. None of us wish that it should ever be necessary, but given that we are seeking to set out these safeguards, can he help in relation to one matter of in-flight legislation? In clause 3(1)(e), there is specific mention of the inclusion of

“delegated acts under the Prospectus Regulation”.

The financial services sector very much welcomes that being included, because it is important. On the other hand, for another important piece of in-flight legislation, the Securities Financing Transactions Regulation referred to in clause 1(3)(f), there is no use of the words “delegated acts”. It is anticipated that under both examples level 2 legislation, as it is called, might be desirable, so can the Minister help by explaining why the distinction has been drawn in that way?

[Mel Stride]

I thank my hon. Friend for his question. He is quite right, although the reference to the Securities Financing Transactions Regulation is, I think from memory, in clause 1(12), line 35 or thereabouts—the fourth file although the fifth measure in the list, the earlier two being combined. As to the main point on which he seeks clarification, the Bill will bring into effect those measures, as amended or otherwise, by affirmative statutory instrument at the time they are brought in. It will then be a case of the way in which those measures are dealt with in terms of the delegated powers to which he refers.

--- Later in debate ---

[Mel Stride]

I am pleased to report that the Bill, as amended in the other place, allows for reporting in respect of the statutory instruments on a six-monthly basis—that commitment is in the Bill—and that there will be four periods in total. The first period of six months will commence from the moment the Bill receives Royal Assent. The report will both look backwards at the powers that have been exercised up until that point and forwards to those powers that may be exercised in the coming period. As to other organisations, such as the Bank of England, there will be a requirement for annual reporting on the basis of the measures undertaken by those regulatory organisations.

[Robert Neill]

The Financial Secretary is being extremely generous, but it may actually speed things along. Can he help me on one matter relating to the second class of legislation, the level 1 files? He set out a list of files that are included in the second category. Is it intended that that is entirely exclusive? The Bill deals largely with the procedure for dealing with these files. I have in mind, for example, the proposals that are being developed by the Commission on non-performing loans and on business crowdfunding services—again, areas where the UK has had a good deal of input into initial discussions but that are not actually listed in the Bill. Is it intended to deal with those? If so, in what way?

[Mel Stride]

I can confirm to my hon. Friend that the list is exhaustive in the terms he was discussing. In the case of non-performing loans, these matters were considered but it was decided that the number of these in relation to the number within the EU was relatively low and that existing tools that are available were adequate to deal with those particular matters. Hence, that particular issue does not feature within the scope of the Bill.

Changes cannot be made in such a way that the implemented files depart in a major way from the effect of the original legislation. However, the Government will have some flexibility to make adjustments in order to take account of the UK’s new position outside the European Union. As a result of amendments to the Bill during its passage through the other place, the Treasury will be required to publish a draft statutory instrument at least a month before laying it, alongside a report detailing: any omissions from the original EU legislation; any adjustments from the original EU legislation; and the justification for those adjustments.

The Treasury will be further required to publish six-monthly reports on how the power has been exercised and how it will be exercised in the following six-month period. Following contributions in the other place, the Government have also introduced a requirement for the financial regulators, the Bank of England and the Financial Conduct Authority, to report annually on their use of any powers sub-delegated to them as a consequence of the Bill.

Having gone through the Bill’s various provisions and outlined its importance both to our future financial stability and to making sure that we are in the right place in the unlikely and undesirable event that we face a no deal, I commend the Bill to the House.

European Affairs

Debate between Mel Stride and Robert Neill

Thursday 15th March 2018 Commons Chamber

[Mel Stride]

The hon. Gentleman will understand that both are an extremely high priority. We will be pursuing both avenues vigorously.

As my right hon. Friend the Chancellor made clear in his Canary Wharf speech last week, financial services is a sector that calls for close cross-border collaboration. The Chancellor also reiterated that it is simply not credible to suggest that a future deal could not include financial services. It is in the interests of both parties to ensure that the EU can continue to access and enjoy the significant benefits afforded by our financial services hub, because it is a regionally and globally significant asset, serving our continent and beyond, and near-impossible to replicate.

The UK can claim excellence in many areas, but in trade in financial services we are truly the global leader. We manage €1.5 trillion of assets on behalf of EU clients, and 60% of all EU capital markets activity is conducted here in the United Kingdom. Around two thirds of debt and equity capital raised by EU corporates is facilitated by banks right here in the UK. The huge economies of scale have led to London’s dominant position in EU financial services. As the Chancellor made very clear last week, we should be under no illusions about the significant costs if this highly efficient shared market is fragmented—costs that will ultimately fall to consumers and companies right across Europe.

[Robert Neill (Bromley and Chislehurst) (Con)]

My right hon. Friend is making a very important point. As the Chancellor set out, those costs are many billions of pounds. One example is the proposed relocation of clearing houses, with an effective cost of some £25 billion a year. Does my right hon. Friend agree in addition that it is critical to have continuity for the legal instruments that underpin financial services, and that continuity of access for legal services must therefore be inextricably linked?

[Mel Stride]

My hon. Friend raises an important point about the significance of financial services, not just to us but to our European partners. On his specific point about regulatory continuity, we are considering the detail of that at the moment. We will certainly look at the prospect of returning to the matter on Report of the relevant Bill.

The UK stands ready to engage on a future trade agreement—one that includes financial services. Our overarching vision is for an economic partnership—including a future trade agreement—that delivers the maximum possible benefits for both our economies in all sectors, respects the integrity of each other’s institutions and seeks to strengthen, not weaken, the prosperity of Europe as a whole. Despite that, some still question the possibility of reaching such an agreement or insist that a trade deal cannot include financial services. The Chancellor addressed those sceptics in his speech last week, when he said that

“every trade deal the EU has ever done has been unique”.

The existing models do not represent the best way forward; nor do they provide a useful precedent to form the basis of any future agreement. Joining the EEA would not give the UK enough control, and a CETA-style deal would present too low a level of market access. The EU and the UK come to the negotiating table from the unique position of having the same rules and regulations on day one, not to mention our deeply interconnected economies. Unlike when other countries negotiate free trade agreements, this is not about aligning two totally different systems. Any new trading agreement should reflect the starting point of deep and historic convergence. We understand that, over time, there will be points of inevitable divergence, so we recognise that any future agreement should set out a clear approach to that aspect.

Our country seeks the deepest and broadest agreement possible—a bold economic partnership that is of greater scope and ambition than any comparable arrangement in history. The ambition of our vision reflects the scale of our mutual interest, our shared history and all that we can achieve together as good friends and trusted neighbours. Leaving the European Union represents an opportunity to chart a prosperous future. Along with my colleagues in Government, I have the greatest faith in our country and in our ability to work with others to achieve a deal that provides and endures for us all.

Tax Avoidance and Evasion

Debate between Mel Stride and Robert Neill

Tuesday 14th November 2017 Commons Chamber

[Mel Stride]

I am grateful to the right hon. Lady. I will take that as a yes—we can work together to try to ensure that that information is provided to HMRC. I see no reason why that should not happen.

[Robert Neill (Bromley and Chislehurst) (Con)]

I very much agree with what my right hon. Friend has said. Before he leaves the international dimension, will he confirm that in recent years—well after many of these papers came to light—the three Crown dependencies and the overseas territory of Gibraltar have fully co-operated with the UK in relation to all tax transparency and OECD measures, and that they have the same tax transparency ratings as the United States, Germany, ourselves and other western democracies?

[Mel Stride]

I am grateful to my hon. Friend for that intervention. In relation to corruption inquiries, for example, we have automatic access to our Crown dependencies and overseas territories as a result of that co-operation.

I recognise how important this issue is to the public, and it is of critical importance to the Government as well. The UK’s tax authority now has more information and more power than ever before to clamp down on avoidance and evasion, because of the actions of this Government. The Government of which the right hon. Lady was a member failed to take those actions. I conclude with the words of the right hon. Lady in last week’s Adjournment debate, when she said

“I have never defended the record of the Labour Government in this area”.—[Official Report, 7 November 2017; Vol. 630, c. 1442.]

That speaks directly to the heart of this issue: an apparent legacy of tax abuses going back many years, framed by the inaction of the Labour party. It speaks to the core of Labour’s approach to the world that the opportunity always lies in criticism and derision, rather than in action and justice. This Government are acting and will continue to leave no stone unturned in the pursuit of those who seek to duck their responsibilities at the expense of us all. Whenever and wherever they are found, this Government will continue to bring the avoiders, the evaders and the non-compliant to book.