Public Appointees (Tax Arrangements)

Nicholas Brown Excerpts

Wednesday 23rd May 2012 Commons Chamber

[Danny Alexander]

I can assure my hon. Friend that HMRC is completely blind as to whom any individual works for. Taxpayer confidentiality is an essential part of the way in which HMRC works and we are making no changes whatever to that. We have passed the information that we discovered through the review to HMRC. It will be for it to decide whether it wishes to make any further inquiries. That will be a confidential matter for it to pursue in its own right. This is not an overall review of IR35; it is a particular consultation in relation to controlling persons of organisations. I am certain that the point that he raised will be noted and perhaps brought forward by him or others in responding to the consultation, which opens today.

[Mr Nicholas Brown (Newcastle upon Tyne East) (Lab)]

The Chief Secretary deserves credit for his handling of the issue since it came into the public domain. Like my right hon. Friend the Member for Barking (Margaret Hodge), I pay tribute to him and to the investigative journalists, David Hencke and others, who first drew it to our attention. It makes no difference whether those arrangements were agreed by Labour Ministers or Ministers in the coalition; they are wrong and he is proceeding in the right way to put a stop to things. Can he tell the House roughly the cost of unwinding the arrangements and whether that cost will fall on the individual Departments from within their existing allocations, or whether some supplemental allocations will be needed? Can he also say when the Secretary of State for Business, Innovation and Skills first knew about the arrangements for the head of the Student Loans Company and what he did to bring them to an end?

[Danny Alexander]

I am grateful for the right hon. Gentleman’s comments and for his role in bringing these matters to the House’s attention. I wholeheartedly agree that it makes no difference when the arrangements started and which Minister was responsible; frankly, the situation has grown up over a number of years and under Governments of different hues. It is right that we are taking action to bring the situation under control and ensure proper transparency so that there is no perception of the potential for tax avoidance. He and I agree 100% on that.

It is impossible to say at the moment what the costs, if any, of unwinding the existing arrangements will be. Of course, as I said in my statement, senior people must be brought on to the payroll, unless there are exceptional short-term circumstances. For others, we need arrangements in place that allow assurances to be given that the proper and full amount of tax is being paid, and that will depend on the outcome of those processes with individual members of staff. Of course, if there are costs to be borne, they will have to be borne from within existing departmental allocations. If Departments do not comply with those rules, there will be a fine of up to five times the salary involved, levied by the Treasury on departmental allocations, which I hope will give Departments a strong incentive to comply with the rules as quickly as possible.