Draft Double Taxation Relief (Mauritius) Order 2018 Draft Double Taxation Relief and International Tax Enforcement (Cyprus) Order 2018

Peter Grant Excerpts

Monday 18th June 2018 General Committees

[Peter Grant (Glenrothes) (SNP)]

I am grateful for the opportunity to make a brief contribution to the debate. I have spoken previously in similar Delegated Legislation Committees to assert my view that the purpose of all these agreements should be to ensure that people pay tax where they should pay tax, morally and on principle, so I support any agreement that provides an incentive for people to do the decent thing and that closes down as fast as possible any loophole or incentive that encourages people to create an imaginary existence somewhere simply to get a preferential rate of tax.

Therefore, what assurances can the Minister give that nothing in the legislation will unintentionally create incentives or opportunities for further tax dodges that HMRC will then have to legislate to try to close down? Can he give concrete examples of the kinds of practices he mentioned in his opening remarks that have developed against the interests of UK taxpayers? Can he give us an indication of how much money is involved in them? Are they a major problem, or is he simply trying to prevent the problem getting any bigger?

I was concerned by the comments of the hon. Member for Beckenham about the potential impact on people who have given a lot of years of valued and dedicated service to the United Kingdom—military or other service—and who may now feel that their retirement plans are being adversely affected because of decisions taken back home in the UK. Can the Minister give us an indication of how big the effect is likely to be on individuals? How many UK citizens are likely to be directly affected, and how badly? Who will be affected? Will it be people who can just about get by on the pension they have accumulated, or people who could buy and sell most hon. Members here and who some of us may not be too sympathetic towards if they were asked to pay a fair share of taxes?

If the Committee and the House approve this legislation, how will the tax status of those UK citizens living abroad compare with the tax affairs of their colleagues who have chosen to stay and live in the United Kingdom in their retirement? I understand that if someone has organised their entire retirement on one set of assumptions and those assumptions change, it is frustrating and upsetting, but I would not want the Government accidentally to create a position in which people who are retiring are given an incentive to go and live, and spend their retirement money, in somebody else’s economy rather than here. We should be looking for people who receive a pension that is funded by the UK taxpayer to pay the same tax on that, regardless of where they choose to live. We would certainly not want to give people an incentive to move overseas and spend their pension promoting somebody else’s economy. I hope the Minister will give us some assurance about that.

The explanatory memorandum for the order relating to Mauritius said that, in general, the draft legislation complies with the OECD framework. I am interested in why it says “in general”. Does that mean that it does not comply in some specific details, or was the person who wrote it just being careful and reluctant to give a 100% guarantee of compliance to anything? Is there anything in either instrument that does not comply with the recommended frameworks from organisations such as the OECD?