Tax Avoidance and Evasion

Virendra Sharma Excerpts

Thursday 13th September 2012 Commons Chamber

[Mr Virendra Sharma (Ealing, Southall) (Lab)]

Thank you, Mr Deputy Speaker, for giving me the opportunity to speak in this very important debate.

We all know the context in which this debate takes place. We all speak to and listen to our constituents at our surgeries and in our town centres, and we know that they are hurting as a result of an international financial crisis caused by irresponsible bankers and made worse by a double-dip recession made in Downing street. The majority are hard-working families and individuals who pay their fair share of taxes and play by the rules, and expect others to do the same.

Given the budget deficit and strain on the public finances, it is all the more important to ensure that everyone pays their fair share of tax and that tax avoidance—playing the system and looking for loopholes—and tax evasion by those who engage in criminal behaviour to evade paying tax are vigorously clamped down on.

The vast majority of those engaged in tax avoidance are the rich and wealthy, and there is, rightly and unsurprisingly, a public outcry when celebrities, senior civil servants, business men and others use tax avoidance schemes to avoid paying their fair share of tax like everybody else. It is morally repugnant and obscene for a wealthy celebrity to pay only 1% in income tax.

The Government are right to consult on introducing a focused and targeted general anti-avoidance rule to stamp out such abuses. I fully support such a move. Tax avoidance legislation has become ever more specific and complicated. A GAAR should reverse that situation and allow a better use of HMRC resources to tackle avoidance across the board.

I part company with the Government on their current job-cutting at HMRC. I welcome the extra £970 million that they have put into tax collection up to 2014, but it makes no sense to cut jobs when the Department has been successful in collecting more tax. Over the past five years, HMRC has raised an extra £4.32 billion and the Public Accounts Committee’s report shows that an additional £1.1 billion could have been collected if 3,200 job losses had been avoided. It cannot be right to make job cuts when so much tax remains uncollected.

The Public and Commercial Services Union is 100% right on that and the public will think it a very strange thing to do when 11 times the extra investment that the Government are putting into tax collection was collected by hard-working HMRC staff over the past five years, and when even more could have been collected if the 3,200 jobs had been retained. Why are the Government planning another 10,000 job losses? I ask the Minister to think again. This is an investment that will result in billions for the Exchequer.

One of the jobs that staff saved from redundancy could do is work in my constituency, throughout London and other parts of the country to tackle the so-called “beds in sheds” problem. A minority of unscrupulous landlords are exploiting the vulnerable by renting out substandard outbuildings at extortionate rates and evading tax. My constituents regularly ask me, “Why should these landlords get away with not paying tax like everyone else?” This problem is all part of the shadow cash economy that denies the Exchequer billions in tax revenues.

The Government have given one-off funding to help councils tackle the problem with multi-partner teams that include HMRC officers in addition to UK Border Agency, police and council officers; but to really tackle it, raise some revenue and disrupt the shadow economy, more consistent resources are needed in both financial and officer terms.

Billions of pounds of tax remains uncollected as a result of both avoidance and evasion. I urge the Government to be braver and invest more in HMRC, not cut jobs. The returns are clear, the public accounts are in need of it and the public are calling for it.