Iraq War (10th Anniversary)

Debate between Michael Meacher and Baroness Primarolo

Thursday 13th June 2013 Commons Chamber

[Madam Deputy Speaker (Dawn Primarolo)]

Order. The hon. Gentleman is making an intervention, not a speech. We have only two hours remaining for this debate and at least six Members still wish to take the Floor. I would be grateful if Members wishing to intervene did so briefly, because otherwise those who wish to make a speech will be disappointed.

[Mr Meacher]

I am pleased that my hon. Friend provided the House with that information, as I do not think it is well understood. It has been claimed in this debate is that the whipping was not very strong, but that is absolutely not the view that most of us take. It was an attempt to corral Members of all parties to support the war. I think that he has skilfully shown the work that was done under the counter, which forced what was necessary. Without it, the vote might well never have happened.

The second lesson—I will be quick, Madam Deputy Speaker, because I know that I have been speaking for some time—is that the power and wilfulness of a Prime Minister who can so brazenly override normal democratic procedures, quite apart from the personality of Tony Blair, is a very serious issue. He made a commitment to go to war at Bush’s Crawford ranch in Texas 10 months before that vote and without consulting anyone. He regularly told Parliament, right up to the very start of the war, that no decision had been taken. Clearly an unstoppable momentum had been deliberately built up. He lent heavily on his Attorney-General between 7 and 17 March to induce him to chance his legal warning that the war was not legal. On 15 February he ignored and dismissed the biggest protest demonstration this country has ever seen, with up to 2 million members of the public marching against the war. According to evidence given by the UK’s ambassador to the US at the time, Sir Christopher Meyer, Bush even rung up Tony Blair to suggest that he could “sit out the war”, while the Pentagon’s Donald Rumsfeld was quite happy to go in alone, but Blair was obsessive and determined to see it through. In an interview in December 2009 he was asked this question:

“If you had known then that there were no WMDs, would you still have gone on?”

He replied:

“I would still have thought it right to remove him”—

that is, Saddam Hussein. To that end, he even colluded with what his own head of MI6, Sir Richard Dearlove, said in July 2002, eight months before the war—that

“the intelligence and facts were being fixed around the policy.”

That background of the contumacious wilfulness of a Prime Minister dragging this country, virtually single-handedly, to war—as it turned out, a war of momentously disastrous consequences—makes it the duty of this House to set down inviolable conditions to prevent any such catastrophe from ever happening again. That must, at the very least, embrace unquestioning compliance with UN resolutions; a clear and unwhipped vote of the Commons and, indeed, the Lords, long before any envisaged hostilities; and a full disclosure of all the data and evidence that can be used to justify war. Only when those conditions are made to apply will we have learned the lessons of this dreadful episode.

Finance (No. 2) Bill

Debate between Michael Meacher and Baroness Primarolo

Wednesday 17th April 2013 Commons Chamber

[Mr Michael Meacher (Oldham West and Royton) (Lab)]

I beg to move, That the clause be read a Second time.

[The Second Deputy Chairman of Ways and Means (Dawn Primarolo)]

With this it will be convenient to discuss the following:

New clause 8—Meaning of ‘tax arrangements’—

‘(1) Arrangements are “tax arrangements” if, having regard to all the circumstances, it would be reasonable to conclude that the obtaining of a tax advantage as a result of tax avoidance was the main purpose, or one of the main purposes, of the arrangements.

(2) Arrangements are not tax arrangements if:

(a) the arrangement was specifically permitted by legislation or regulation relating to any of the taxes referred to in section [General anti tax-avoidance principle] (3) or is clearly consistent with principles on which the taxes referred to in section [General anti-tax-avoidance principle] (3) are based whether express or implied,

(b) the advantaged party shows that the arrangement was neither designed nor carried out with the intention of achieving a tax advantage and that no step or feature was included in or omitted from it with that intention.’.

New clause 9—Meaning of ‘tax avoidance’—

‘(1) Arrangements represent “tax avoidance” if, having regard to all the circumstances, it would be reasonable to conclude that tax is not paid—

(a) by the right person, or

(b) at the right time, or

(c) in the right place, or

(d) under the charging provisions of the right tax, or

(e) at all when it would appear right that it was due, or

(f) in any combination of the circumstances noted in (a) to (e).

(2) In subsection (1) an arrangement is considered “right” when the economic substance of that arrangement giving rise to a potential charge to tax under any one or more of the taxes referred to in section [General anti-tax-avoidance principle] (3) of this Part accords with the form in which that arrangement is declared for assessment for taxation purposes whether in the United Kingdom or elsewhere with non-declaration of a potential charge to tax on the economic substance of a transaction in the United Kingdom as a result of the form adopted for its completion being considered a tax declaration for the purposes of this section.

(3) For the purposes of subsection (2) the economic substance of an arrangement does not accord with the economic form in which that arrangement is declared for taxation purposes if having regard to all the circumstances:

(a) one or more of the parties to the arrangement cannot reasonably have been included as a party to it without the securing of a tax advantage having been an objective,

(b) the contractual form of the arrangement cannot reasonably have been adopted without the securing of a tax advantage having been an objective,

(c) the location in which the arrangement is recorded as having occurred cannot reasonably have been decided upon without the securing of a tax advantage having been an objective;

(d) the timing of the arrangement cannot reasonably have been decided upon without the securing of a tax advantage having been an objective;

(e) the arrangement has as one or more of its objectives the declaration of a transaction for assessment under the provisions of one of the taxes referred to in section [General anti-tax-avoidance principle] (3), or none of them, when declaration under the provisions of another of those taxes would seem more appropriate,

(f) the arrangement represents a transaction as relating to capital when it would appear to related to income,

(g) the arrangement represents a transaction as being income derived from capital when it would appear to be derived from the profits of a trade or employment,

(h) the arrangement appears to be without economic substance,

(i) the arrangement cannot be regarded as a reasonable course of action having taken into consideration—

(i) any relevant tax provisions,

(ii) the substantive results of the arrangements, and

(iii) any other arrangements of which the arrangements form a part.

(j) Any party to the arrangement has stated that an objective of structuring the arrangement in the form adopted was the securing of a tax advantage.

(4) In subsection (3) “taxation purposes” includes—

(a) any action required to comply with the obligations of any legislation or regulation relating to any of the taxes referred to in section [General anti-tax-avoidance principle] (3) or their administration or assessment notwithstanding any deficiency or shortcoming in them that the arrangement is meant to exploit,

(b) any principles on which the taxes referred to in section [General anti-tax-avoidance principle] (3) are based whether express or implied,

(c) the policy objectives of the taxes referred to in section [General anti tax-avoidance principle] (3).’.

New clause 10—Meaning of ‘tax advantage’—

‘(1) A “tax advantage” may be considered to have arisen for the purposes of this Part if:

(a) the arrangement results in an amount of income, profits or gains for tax purposes that is significantly less than the amount for economic purposes,

(b) the arrangement results in deductions or losses of an amount for tax purposes that is significantly greater than the amount for economic purposes,

(c) the arrangement results in a claim for the repayment or crediting of tax (including foreign tax) that has not been, and is unlikely to be, paid,

(d) the arrangements involve a transaction or agreement the consideration for which is an amount or value significantly different from market value or which otherwise contains non-commercial terms,

(e) the arrangement results in an amount of income, profits or gains tax purposes being assessed for tax purposes upon a person who appears to have less economic claim upon that income, profit or gain than another person who would have greater taxation liability due upon it if they were assessed to that income, profit or gain for tax purposes,

(f) the arrangement results in an amount of income, profit or gain being subject to a tax other than that which the economic substance of the arrangement would suggest appropriate with less tax being due as a result,

(g) the arrangements results in an amount of income, profit or gain being subject to tax assessment in a jurisdiction other than the United Kingdom when the economic substance of the arrangement would suggest that inappropriate whether or not more or less tax is due in that other place or not,

(h) the arrangement results in a lower rate of tax being applied to the income, profit or gain than might otherwise have been the case,

(i) the arrangement results in tax being paid later than might otherwise have been the case,

(j) any combination of the circumstances referred to in subsection (a) to (i).’.

(2) Subsection (1) is not to be read as limiting in any way the cases in which tax arrangements might give rise to a tax advantage.

(3) A tax advantage may, without limitation, be indicated to have arisen by the existence of:

(a) relief or increased relief from tax,

(b) repayment or increased repayment of tax,

(c) avoidance or a reduction of a charge to tax or an assessment to tax,

(d) avoidance of a possible assessment to tax,

(e) a deferral of a payment of tax or an advancement of a repayment of tax, and

(f) avoidance of an obligation to deduct or account for tax,

(g) the passing of an obligation to make declaration of a liability to be assessed to tax to another party.’.

New clause 11—Counteracting tax advantages—

‘(1) If tax arrangements meeting the definition of section [Meaning of “tax arrangements”](1) of the Part are identified then the tax advantages arising from the arrangements are to be counteracted on a just and reasonable basis.

(2) The counteraction may be made in respect of each or any tax to which the general anti-tax-avoidance principle applies.

(3) An officer of Revenue and Customs must make, on a just and reasonable basis, such consequential adjustments in respect of any tax to which the general anti-abuse rule applies as are appropriate.

(4) These consequential adjustments:

(a) may be made in respect of any period, and

(b) may affect any person (whether or not a party to the arrangements) so long as they are connected to the party that has enjoyed the benefit of a tax advantage, such connection being as defined in section 993 of the Income Tax Act 2007.’.

New clause 12—Proceedings before a court or tribunal—

‘(1) In proceedings before a court or tribunal in connection with the general anti-tax-avoidance principle, HMRC must show—

(a) that there are tax arrangements that give rise to a tax advantage as a result of tax avoidance, and

(b) that the counteraction of the tax advantages arising from the arrangements is just and reasonable.

(2) In determining any issue in connection with the general anti-tax avoidance principle, a court or tribunal must take into account—

(a) explanatory notes that cast light on the objective setting or contextual scene of the specific Taxing Act or this Part of this Act.

(b) the clear statements by a Minister or other promoter of the specific Taxing Act or this Part of this Act together if necessary with such other parliamentary material as was necessary to understand such statements and their effect.

(c) HMRC’s guidance about the general anti-tax-avoidance principle,

(d) guidance, statements or other material (whether of HMRC, a Minister of the Crown or anyone else) that is in the public domain at the time the arrangements were entered into as to the principles on which the taxes referred to in section [General anti tax-avoidance principle] (3) are based whether express or implied, the nature of tax avoidance, and those matters considered to fall within section [Meaning of “tax arrangements”] (2)(a) of this Part (on which matter HMRC shall issue periodic guidance),

(e) evidence of established practice at that time,

(f) evidence as to the intent of the parties, irrespective of the outcome of the arrangements.’.

New clause 13—Application for clearance of transactions—

‘(1) A person may provide the Commissioners for Her Majesty’s Revenue and Customs with particulars of a transaction or transactions effected or to be effected by the person in order to obtain a notification about them under this section.

(2) If the Commissioners consider that the particulars, or any further information provided under this subsection, are insufficient for the purposes of this section, they must notify the person what further information they require for those purposes within 30 days of receiving the particulars or further information.

(3) If any such further information is not provided within 30 days from the notification, or such further time as the Commissioners allow, they need not proceed further under this section.

(4) The Commissioners must notify the person whether they are satisfied that the transaction or transactions, as described in the particulars, were or will be such that no counteraction notice ought to be served about the transaction or transactions under the provisions of section [Counteracting the tax advantages] of this Act.

(5) The notification must be given within 30 days of receipt of the particulars, or, if subsection (2) applies, of all further information required but subject to the conditions of subsection (6) having been met.

(6) The person making application for a notification under this section shall specify—

(a) the amount of tax that they estimate might be due as a result of making the arrangement, or

(b) if that arrangement shall be continuing within the two-year period following its commencement, and

(c) shall pay a fee in respect of the notification to be supplied under section (4) prior to that notification being supplied of not less than—

(i) £1,000, or

(ii) five per cent of the estimated tax due as a result of making this arrangement, whichever shall be the greater,

such charge to be subject to value added tax and to be due whether or not the requested notification can be supplied or not,

(d) HMRC shall have power to substitute such other sum that it thinks appropriate for those sums notified under subsections (a) and (b) if it thinks those estimates unrealistic,

(e) if HMRC makes use of the powers in subsection (d) it shall notify the person within 30 days of its intent to do so and provide its estimate of the tax that might be due under the arrangement with reasons stated, with the person having 30 days thereafter to appeal against the same or let their applications lapse.

(f) HMRC may publish its notifications issued under this section so long as the taxpayer’s identity is anonymised.’.

New clause 14—Effect of clearance notification under section [Application for clearance of transactions]—

‘(1) This section applies if the Commissioners for Her Majesty’s Revenue and Customs notify a person under section [Application for clearance of transactions] that they are satisfied that a transaction or transactions, as described in the particulars provided under that section, were or will be such that no counteraction notice under the provisions of section [Counteracting tax advantages] of this Act ought to be served about the transaction or transactions.

(2) No such notice may then be served on the person in respect of the transaction or transactions.

(3) But the notification does not prevent such a notice being served on the person in respect of transactions including not only the ones to which the notification relates but also others.

(4) The notification is void if the particulars and any further information given under section [Application for clearance of transactions] about the transaction or transactions do not fully and accurately disclose all facts and considerations which are material for the purposes of that section.’.

New clause 15—Power to obtain information—

‘(1) This section applies if it appears to an officer of Her Majesty’s Revenue and Customs that a person may be a person to whom section [Counteracting tax advantages] applies in respect of one or more transactions.

(2) The officer may serve a notice on the person requiring the person to give the officer information in the person’s possession about the transaction or, if there are two or more, about any of them.

(3) That information must be information about matters that are relevant to the question whether a counteraction notice should be served on the person.

(4) Those matters must be specified in the notice under subsection (2).

(5) That notice must require the information to be given within such period as is specified in it.

(6) That period must be at least 30 days.’.

New clause 16—Interpretation—

‘In this Part of this Act—

“arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable),

“connected” is defined by section 993 of the Income Tax Act 2007,

“the general anti-tax avoidance principle” has the meaning given by section [General anti tax-avoidance principle],

“HMRC” means Her Majesty’s Revenue and Customs,

“notification” has the meaning given by section [Application for clearance of transactions] (1),

“tax advantage” has the meaning given by section [Meaning of “tax advantage”],

“tax arrangements” has the meaning given by section [Meaning of “tax arrangements”] (1),

“tax avoidance” has the meaning given by section [Meaning of “tax avoidance”], and

“taxes” has the meaning given to it by section [General anti-tax-avoidance principle] (3).’.

Amendment 11, in clause 203, page 120, line 1, after ‘taxes, insert

‘provided the de minimis test in subsection (4) is satisfied.’.

Amendment 3, page 120, line 9, at end add—

‘(4) Her Majesty’s Revenue and Customs shall review the possibility of bringing forward measures to work in conjunction with other G8 countries to require multi-national companies to publish a single easily comparable figure for the amount of corporation tax they pay in the UK, and within six months of the passage of this Act, place a copy of the review in the House of Commons Library.

(5) The Chancellor of the Exchequer shall review the effects of incorporating measures into the general anti-abuse rule to require multi-national companies to publish a single easily comparable figure for the amount of corporation tax they pay in the UK on Treasury tax receipts within six months of the passage of this Act and consult with G8 countries on their effectiveness, and place a copy of the review in the House of Commons Library.’.

Amendment 6, page 120, line 9, at end add—

‘(4) The Chancellor shall review the possibility of bringing forward a requirement for UK companies to report their use of tax schemes which have an impact on developing countries, including a review of the possibility of bringing forward proposals to require that when such schemes are identified under those rules, Her Majesty’s Government shall take steps to notify developing countries’ tax authorities and assist in the recovery of that tax. A copy of the report shall be placed in the House of Commons Library within six months of Royal Assent.’.

Amendment 7, page 120, line 9, at end add—

‘(4) The Chancellor shall make an assessment of the impact of changes to Controlled Foreign Company Rules in the Finance Act 2012 and as a result of this Part of this Act on the overall tax take of developing countries. A copy of the report shall be placed in the House of Commons Library within six months of Royal Assent.’.

Amendment 8, page 120, line 9, at end add—

‘(4) The Chancellor shall provide a report to Parliament within two years of the passing of this Act, as part of a wider post-implementation review, into the scope of GAAR, the application of the double reasonableness test and its deterrent effect.’.

Amendment 12, page 120, line 9, at end add—

‘(4) The amount of the tax advantage arising from the tax arrangement must be equal to or exceed the following amount for the relevant tax:

(a) for income tax the amount is £100,000,

(b) for corporation tax, including any amount chargeable as if it were corporation tax or treated as if it were corporation tax, the amount is £250,000,

(c) for capital gains tax the amount is £100,000,

(d) for petroleum revenue tax the amount is £250,000,

(e) for inheritance tax the amount is £100,000

(f) for stamp duty land tax the amount is £40,000,

(g) for the annual tax on enveloped dwelling the amount is £40,000.

(5) For the purposes of subsection (4) the amount of the tax advantage shall be the greatest of:

(a) the total tax advantage for all tax years in which it is reasonable to assume that the tax arrangement was anticipated to be effective at the time the arrangements were entered into;

(b) the total tax advantage for all tax years that would have arisen from the tax arrangement other than for the provisions of this Part;

(c) the total tax advantage arising from all tax arrangements of the taxpayer that were anticipated to be effective in the relevant tax year.

(6) For the purposes of subsection (5) the amount of the tax advantage shall include any tax advantage obtained by the taxpayer or a related party of the taxpayer.’.

Clauses 203 to 212 stand part.

That Schedule 41 be the Forty-first schedule to the Bill.

[Mr Meacher]

The purpose of new clause 7 and new clauses 8 to 16, which are connected and which stand in my name and those of my hon. Friends, is to replace the Government’s anti-tax avoidance measure, the GAAR or the general anti-avoidance rule, as set out in clauses 203 to 212, with an alternative, much fairer, more effective and more comprehensive measure, the GAntiP or general anti-avoidance principle—I apologise for all the acronyms. In practice, the latter would mean that where a court could establish, having taken account of all the relevant circumstances, that the primary purpose of an arrangement was the avoidance of tax rather than any economically substantive transaction, it could strike it down.

Let me say immediately to the Exchequer Secretary that I appreciate that although UK tax avoidance for the last 70 or so years has been considered on the basis of four UK court decisions—and notably the Duke of Westminster case of 1936—the GAAR guidelines, which were published a couple of days ago, now override that position. I understand that they are, in effect, legal precedent in their own right, which any court has to take into account. That is certainly a significant advance. However, the Government’s GAAR, as set out in this Bill, is still fatally flawed.

First and most importantly, the GAAR advisory panel is riddled through and through with a blatant conflict of interest. It will be drawn almost exclusively from highly paid City lawyers who have spent their careers, and made their fortunes from, giving expensive advice to companies on how to avoid tax. It is like putting the poachers in charge of the gamekeepers. Surely it would be right for independent experts—some drawn from Her Majesty’s Revenue and Customs—to form the main body of what should obviously be an impartial membership.

Secondly, it is proposed that the application of the GAAR will be determined on the basis of a highly subjective and partisan criterion, namely whether the arrangement at issue

“cannot reasonably be regarded as a reasonable course of action”.

From the point of view of HMRC and the poor innocent taxpayers who are penalised if the corporate tax abusers are allowed to get away with it, there is a double jeopardy at work. First, what most people might regard as unreasonable might well be regarded by highly paid City lawyers who make their money out of promoting tax avoidance as perfectly reasonable.

Secondly, what is a “reasonable course of action” is heavily dependent on a subjective view of the role of taxation in society. Whatever else it is, it is not an objective test at all. The point is surely that the GAAR advisory panel has been inserted only as a filter, in order to give the tax avoidance industry a veto on which of its practices shall be called to account. That is clearly prejudicial and indefensible. If City lawyers employed in defending corporate tax abuse are asked whether it is reasonable to hold the view that an arrangement is a “reasonable course of action”, it is a virtual certainty that, except in the most egregious cases, they will agree that it is—at which point many highly controversial and artificial devices will not even get near an independent judge in a court. For that reason alone, I believe that the GAAR should be thrown out, although it has other serious flaws.

Corporate Tax Avoidance

Debate between Michael Meacher and Baroness Primarolo

Monday 7th January 2013 Commons Chamber

[Mr Meacher]

The right hon. Gentleman, whom I respect, wishes to raise a partisan issue when we are discussing something of much greater importance. Perhaps I can satisfy him by saying that I entirely agree with him. New Labour was just as bad as the Tories and I fully recognise that, but let us turn to where we are and what we ought to do about it.

The third question is this: if the Government are serious about tackling tax avoidance, why are they cutting the number of tax inspectors, many of whom recover more than 100 times the cost of their salary? In 2010 there were 68,000 of them. There are now far fewer. The problem is that when the Chancellor gives his dog-whistle that Britain is open for business, part of that coded message is that Britain is open for tax avoidance, and there will be far fewer tax inspectors nosing about and prying into shady practices.

While the Government have ostentatiously avoided all the actions that will end the transfer of tax avoidance, the truth is even worse. They are now drawing up measures which, frankly, will rip the guts out of the laws that safeguard the nation’s corporate tax base. They have exempted from tax multinationals’ foreign profits, but allow tax relief for the costs of funding them. In effect, that turns the UK itself into a corporate tax haven, which incentivises multinationals to shelter income offshore and to place real business overseas, using the UK as a worldwide platform for tax avoidance.

The Government are now going even further with the CFC—controlled foreign companies—rules. From January 2014, multinationals that open a finance subsidiary in a tax haven will have their corporation tax, as staggering as it may seem, reduced from the current 23% to 5.5%. In future, therefore, multinational companies really need not bother with tax avoidance any more, because the Government are serving it up to them on a plate.

The latest wheeze that the Government have come up with is the patent box. If a company has a product with a small patented component, it will qualify for a 50% cut in its corporation tax—that is 10% from April 2017—not only on that product but on the whole of its profits.

A third example is the general anti-avoidance rule, which the Government portray as their flagship measure against tax avoidance. Actually, it is the reverse. By being narrowly drawn it will block the worst kinds of tax avoidance, but by the same token—

[Madam Deputy Speaker (Dawn Primarolo)]

Order.