:00:00. > :00:09.Speaker! Order.
:00:10. > :00:15.Finance Bill. We begin with Government amendment
:00:16. > :00:21.114 to clause 140 four. With which, we will take the other amendments,
:00:22. > :00:26.clauses, schedules and new clauses on the Amendment paper. Before I
:00:27. > :00:31.call the Minister to move Government amendment 114, for the sake of
:00:32. > :00:40.clarity, he has the permission of the chair and the sympathy of the
:00:41. > :00:44.House in his requirement to stand throughout proceedings. Or, indeed,
:00:45. > :00:48.to be in whichever position suits him, in order that he can spend
:00:49. > :00:57.several hours at the dispatch box with his current disability. He has
:00:58. > :01:04.a sympathy of the house and the prime minister will do as he sees
:01:05. > :01:08.fit. Mr David Gauke. Thank you and can I begin by
:01:09. > :01:13.expressing my gratitude for your dispensation? I will be taking
:01:14. > :01:17.interventions but I think it will not disconcert members of the house
:01:18. > :01:24.if I remain standing at the dispatch box whilst doing so. I beg to move
:01:25. > :01:29.that clauses 144-154, schedules 18-20 two and the amendments stay
:01:30. > :01:34.part of the bill. There is a great deal to cover and a large of
:01:35. > :01:40.amendments from right honourable members opposite, which I will have
:01:41. > :01:45.to cover briefly at this point. Let me try to cover as much information
:01:46. > :01:49.as I can at this point. As quickly as I can, and respond to any points
:01:50. > :01:56.majoring because of the debate. I would like to open the debate by
:01:57. > :02:03.discussing clauses 144 to 146, which make administrative changes to the
:02:04. > :02:10.procedure, and introduce a new penalty for those who enter into
:02:11. > :02:14.certain tax arrangements. Close 144 allows HMRC to make a provisional
:02:15. > :02:21.counteraction, where they believe the tax is due but the time limits
:02:22. > :02:27.are about to expire. Clause 145 is an admin change to strengthen the
:02:28. > :02:31.procedural efficiency. Currently, the procedure requires each user of
:02:32. > :02:43.the same type of tax avoidance and to be referred to separately to the
:02:44. > :02:48.advisory panel. This is a use of the panels resources and clause 145
:02:49. > :02:53.correct this. Clause one 46 introduces a new penalty of 60% for
:02:54. > :02:59.taxpayers who enter into abusive tax arrangements, which are counteracted
:03:00. > :03:06.under the GAAR. The Government has tabled 84 amendments to clause one
:03:07. > :03:09.44-146, making minor changes to ensure the legislation works as
:03:10. > :03:14.intended. I would like to respond to new clause for Mac and amendment
:03:15. > :03:20.format, which relate to the GAAR clauses I have outlined. We ask that
:03:21. > :03:25.the Government conduct a review of the GAAR in eight years' time. The
:03:26. > :03:28.GAAR advisory panel are required to a non-eyes reports of the cases they
:03:29. > :03:36.consider. It is difficult to see how this new clause could provide a
:03:37. > :03:41.better insight into GAAR cases than this. Amendment four proposes a
:03:42. > :03:47.penalty of 100% is introduced for the GAAR. Under the existing penalty
:03:48. > :03:51.rules, a penalty of 70-100% will be charged usually in cases of fraud.
:03:52. > :03:58.It is right the penalty sits just below this. Under the new measures
:03:59. > :04:03.of tax avoidance, it can be charged under the existing penalty rules and
:04:04. > :04:07.the GAAR penalty to a maximum of 100%. As such, the Amendment is
:04:08. > :04:09.little more than what we are already suggesting. I therefore urge the
:04:10. > :04:27.House to reject them. Let me turn to clause 147. A new
:04:28. > :04:34.threshold condition for the existing pool tasks regime introduced by
:04:35. > :04:39.clause 140 eight. The new serial avoidance regime will tackle those
:04:40. > :04:45.tax avoidance, multiple tax avoidance schemes. It will put
:04:46. > :04:53.avoiders on notice. If they use further schemes and HMRC defeat
:04:54. > :04:56.them, they will face serious and ex-collating sanctions including a
:04:57. > :04:59.penalty starting at 20% of tax understated and reaching 60% for a
:05:00. > :05:07.third scheme defeat well under notice. Clause 148 introduces a new
:05:08. > :05:13.threshold condition so that promoters who have promoted three
:05:14. > :05:19.schemes that have been defeated by HMRC over an eight-year period risk
:05:20. > :05:27.entering the pool tasks regime. The government has made 28 amendments.
:05:28. > :05:30.The amendments to schedule a team provide for those who try to avoid
:05:31. > :05:35.tax through companies which they own or partnerships to be brought within
:05:36. > :05:40.the scope of the new regime. Amendments to clause 148 involves
:05:41. > :05:48.put us were tax avoidance is promoted through associated persons.
:05:49. > :05:56.The schemes will work as it is intended. Clause 149 introduces a
:05:57. > :05:58.new requirement for a large businesses to publisher attack
:05:59. > :06:07.strategies ensuring greater transparency about the tax approach
:06:08. > :06:10.to HMRC, tax holders and the public. It promotes good tax compliance well
:06:11. > :06:14.it provides a fair and stable environment to do business. The
:06:15. > :06:19.strategy published by businesses must cover of the area is published
:06:20. > :06:24.in publication and remain accessible. A penalty may be payable
:06:25. > :06:28.if the strategy is not published or the information contained does not
:06:29. > :06:34.meet the requirements of the legislation. The government is also
:06:35. > :06:39.committed to tackling cases of aggressive tax planning, schedule 19
:06:40. > :06:42.introduces a new special measures process which will apply sanctions
:06:43. > :06:47.to large businesses which persistently undertake aggressive
:06:48. > :06:52.tax planning or refuse to work with HMRC in a collaborative and
:06:53. > :06:58.transparent way, taken together clause 149 and schedule 19 will
:06:59. > :07:03.reduce the appetite for aggressive tax planning. I would like to
:07:04. > :07:08.respond to the amendments lead by the opposition. Amendments 5-18
:07:09. > :07:12.would collectively to choose a requirement for directors of a
:07:13. > :07:21.business to be personally, jointly and severally joined -- responsible.
:07:22. > :07:27.Rising to a monthly charge of ?25,000 per month after the initial
:07:28. > :07:35.12 months have passed. Amendments 9-14 and 18 propose that the said
:07:36. > :07:38.named directors should not be re-burst and impose further
:07:39. > :07:43.penalties. These amendments we believe are disproportionate and go
:07:44. > :07:47.against the principle of encouraging a behavioural change across
:07:48. > :07:51.businesses, whilst making any collective responsible to in the
:07:52. > :07:56.businesses and their tax strategy is no exception. This government
:07:57. > :08:00.believes that any penalty is a business responsibility, not one to
:08:01. > :08:04.be pursued over a group of directors. In summary, these
:08:05. > :08:09.amendments would result in less clarity around any sanctions and not
:08:10. > :08:16.more. I urge the House to reject. I would like to respond to the
:08:17. > :08:22.amendments to clause 149, tabled by the right honourable member of the
:08:23. > :08:27.Don Valley. To publish a country by country report on their activities
:08:28. > :08:33.within their published tax strategy. As I have set out, this government
:08:34. > :08:36.fully shares her aims of increasing transparency and clamping down on
:08:37. > :08:42.avoidance and evasion wherever it occurs. Indeed, this government has
:08:43. > :08:47.led the way in calling at an international level for public
:08:48. > :08:52.country by country reports. However the amendments that she has brought
:08:53. > :08:55.forward I do not believe would help achieve the objectives that we all
:08:56. > :09:01.share. The amendment has been put forward, that has been put forward
:09:02. > :09:04.as technically flawed and as a consequence does not achieve the
:09:05. > :09:08.state of transparency or pro business objectives that we all
:09:09. > :09:12.hold. She has said that her amendment would mean that
:09:13. > :09:16.multinational businesses like Google will be forced to publish headline
:09:17. > :09:21.information about where they do business, the money they make and
:09:22. > :09:25.the tax they pay. But that is not the case. Government legal advice is
:09:26. > :09:32.that in practice the amendment would only play is a requirement on UK
:09:33. > :09:36.headquarters multinationals. Foreign headquartered multinationals like
:09:37. > :09:41.Google would not be involved at all. That underlies the transmitter and
:09:42. > :09:46.seek objective of the amendments. Cashback transparency. It would
:09:47. > :09:50.impose reporting requirement that does not apply to foreign
:09:51. > :10:00.competitors operating in the same market. So to give an example, the
:10:01. > :10:04.amendment would result in a company headquartered in the UK, whether it
:10:05. > :10:12.be in the mainland or Northern Ireland, having to file these public
:10:13. > :10:16.reports. Whereas a company headquartered in the Republic of
:10:17. > :10:20.Ireland or indeed pretty much anywhere else, would not be in that
:10:21. > :10:29.position. I think this does go against the level playing field
:10:30. > :10:35.objective that the right honourable member has emphasised the importance
:10:36. > :10:43.of. At this time of it -- increased uncertainty, we should be aware of
:10:44. > :10:54.imposing further commitment on businesses. I will first give way to
:10:55. > :11:00.the right member from barking. I am grateful to the minister for giving
:11:01. > :11:05.way. Can I understand from him, he said in his contribution, that the
:11:06. > :11:10.amendment moved by my honourable friend was flawed. That is not the
:11:11. > :11:17.advice she has received. It seems to me that the real motivation is that
:11:18. > :11:24.the government appears to be more driven by its ideas about tax
:11:25. > :11:29.competition. Will he confirm that that is right. I would argue with
:11:30. > :11:32.them that it is more important to have transparency, particularly for
:11:33. > :11:39.the British people, and that any global company that chooses to leave
:11:40. > :11:44.the UK simply because of the demands of transparency and a man is to be
:11:45. > :11:50.fair tax, it'll be a rear occurrence and should it occur, it may well be
:11:51. > :11:54.that it is the sort of company we do not want to have here in the UK.
:11:55. > :12:01.There are some issues in terms of the timing of this, how this would
:12:02. > :12:06.operate. But I do also want to highlight this issue that the only
:12:07. > :12:11.company to be clear the only companies that would fall in the
:12:12. > :12:15.scope of this amendment would be UK headquartered companies. So the
:12:16. > :12:23.Googles of this world would be unaffected. We believe that the way
:12:24. > :12:26.to progress this is on a multilateral basis. Considerable
:12:27. > :12:34.progress has been made. It was slightly unfortunate timing to bring
:12:35. > :12:37.this to your notice, the relevant Commissioner in the EU was seeing
:12:38. > :12:44.that we were on the cusp of a deal as an -- to an EU level that he was
:12:45. > :12:49.hoping that he was hoping this would be concluded in the course of the
:12:50. > :12:54.Slovakian presidency, so in the second half of this year. And the UK
:12:55. > :12:56.has been leading the way in terms of that debate. Indeed we have been
:12:57. > :13:06.calling for the commission to toughen up. I want to complete this
:13:07. > :13:11.point, I am being bombarded by the Right Honourable members. We do
:13:12. > :13:18.believe that this is right. I would make this point. If you are... We
:13:19. > :13:24.know that sometimes the debate in terms of corporation tax tends to
:13:25. > :13:29.focus on sales of a company. Corporation tax is not based on
:13:30. > :13:36.Sills, it is based on activity. If you do a lot of activity in the UK
:13:37. > :13:40.and seals and another juror districts -- jurisdiction, you will
:13:41. > :13:44.not pay a lot of tax in jurisdictions where there is little
:13:45. > :13:48.or no activity for quite a lot of sales. If the UK is the only
:13:49. > :13:52.jurisdiction that is putting this information out or is requiring is
:13:53. > :14:00.companies to put this information, there will be a lot of of UK
:14:01. > :14:05.companies in -- and foreign jurisdictions, not being a lot of
:14:06. > :14:10.tax, but honourable to criticism. I think it would be a lot easier for
:14:11. > :14:17.all businesses to build to say, we can point to an Italian company and
:14:18. > :14:21.German company and French, Swedish company, whatever you will, that is
:14:22. > :14:25.in the same position but has a lot of activity in its own jurisdiction,
:14:26. > :14:31.a lot of sales and another juror restriction, it is being tax with
:14:32. > :14:37.its activity is and not the sills. The UK is unilaterally doing this. I
:14:38. > :14:40.think it is unfair and reputational damage to a business is something
:14:41. > :14:51.that can damage the commercial interests as the honourable member
:14:52. > :14:58.knows very well. I will give way to the honourable member of the Don
:14:59. > :15:02.Valley. The problem here is that so much about what we're finding about
:15:03. > :15:05.companies and where they do their business and profits is coming
:15:06. > :15:10.through leaks. There is massive reputational damage to businesses.
:15:11. > :15:13.This gives us a chance they put it on a better footing, in providing
:15:14. > :15:18.information, but the baseline headlines about where they do
:15:19. > :15:25.business, whether trade and whether profits are. Surely that is
:15:26. > :15:30.something we can read on? I think principle and the destination is
:15:31. > :15:34.pretty clear. We are moving in the direction of companies publishing
:15:35. > :15:40.this information. My view is that the UK should be leading the way. In
:15:41. > :15:46.working out a multilateral deal whereas were lots of come countries
:15:47. > :15:52.impose a essentially the same requirements, I think that would in
:15:53. > :15:57.help improve transparency. I want to stress I do not think the UK should
:15:58. > :16:00.be the last move here by any means. I think the US is some way away from
:16:01. > :16:06.moving in this direction and I do not think we should be waiting for
:16:07. > :16:11.the US. I think there is a very strong case for saying that we
:16:12. > :16:16.should be the before the US. But I think particularly given such good
:16:17. > :16:20.progress is being made on a European level, and we remain members of the
:16:21. > :16:25.European Union, and there is appetite in other European states,
:16:26. > :16:32.let us deliver this. If in two years' time no progress has been
:16:33. > :16:36.made, I have no doubt that they will be coming back thing, why has this
:16:37. > :16:42.not happened? I think her case would be strengthened. Until we give that
:16:43. > :16:47.a fair wind, I think it would be premature for us to go in
:16:48. > :16:51.unilaterally. I thank the Minister. He has a perfectly justified and
:16:52. > :16:54.good reputation for being sympathetic and driving this agenda
:16:55. > :16:59.forward and he will recall the discussions we had both an
:17:00. > :17:04.opposition and back in 2010 on precisely the point addressed in
:17:05. > :17:07.this amendment. It is agreed amongst all of us that companies should pay
:17:08. > :17:13.tax whether profits are earned. He will be as aware as I am some of the
:17:14. > :17:16.Brewers people in the world, they live on some of the realist --
:17:17. > :17:20.itches relisted. Taxes should be paid and were those profits are
:17:21. > :17:27.earned. Can I ask them to respond very fully to the point that the
:17:28. > :17:30.right Honourable Lady from the Don Valley is making. If he says that
:17:31. > :17:33.her clause is defective in some way, will he give a commitment that the
:17:34. > :17:38.government will look at those defects and see whether they can
:17:39. > :17:44.frame a clause which will address the first part of what she has said,
:17:45. > :17:49.which as I understood from his Commons, he understood Wes? To
:17:50. > :17:55.address this issue most fully, the Finance Bill is not the ideal place
:17:56. > :18:01.in which to do this. This is an issue that would... There is no
:18:02. > :18:04.criticism of the right Honourable member of the Don Valley who has
:18:05. > :18:09.shown much ingenuity to get this clause, this amendment in order. But
:18:10. > :18:13.this is issue eventually an issue for company Lee Law and would be
:18:14. > :18:18.best placed in that area. That would be the best way of doing it. I will
:18:19. > :18:27.respond to my honourable friend. If I may. We are keen to plummet public
:18:28. > :18:31.country by country reporting. We want to do it on a multilateral
:18:32. > :18:36.basis. As I have said to the House, if there was a lack of progress on
:18:37. > :18:41.this, then there is clearly something that is a government we
:18:42. > :18:46.want to return to, given the concerns and I think I hold all
:18:47. > :18:52.sides in all parts of the House. I think we will all agree that the
:18:53. > :18:58.best result would be a position where we can move forward on a
:18:59. > :19:02.multilateral basis. I thank the Minister giving way. It is clear
:19:03. > :19:05.that the Minister has some sympathy with the motion put forward by my
:19:06. > :19:13.honourable friend and most of the public accounts can have members of
:19:14. > :19:17.many parties. Will he commit, rather than requiring my friend to come
:19:18. > :19:21.back in the future, the government will look at this multilaterally. Or
:19:22. > :19:26.will he go further today and agreed a sunrise close to add to what my
:19:27. > :19:30.honourable friend and I and others have put forward so that this comes
:19:31. > :19:36.into action if the multi lateral action does not come to fruition?
:19:37. > :19:45.We are in a fast-moving area, and the progress in the recent months
:19:46. > :19:48.has been considerable. Just at the beginning of this year, a deal did
:19:49. > :19:52.not look possible and now the EU looks to be moving in that
:19:53. > :19:56.direction. The EU commissioner said something was likely by the end of
:19:57. > :20:02.this year. I think what I can certainly say, and I suppose only
:20:03. > :20:08.with the caveat that we will have a new Prime Minister and so on, but my
:20:09. > :20:15.view is that if we have not made progress by this time next year. ...
:20:16. > :20:19.On multilateral agreements, we need to look carefully at this issue once
:20:20. > :20:25.again. I do not want to make a full commitment because it may not be me
:20:26. > :20:30.standing desperately at this dispatch box whilst I can. It may
:20:31. > :20:36.not be me as a source of support. I might not be in that position so I
:20:37. > :20:41.make that caveat. I think, looking at it, there is every chance that,
:20:42. > :20:46.given we are likely to make progress, and would be disappointed
:20:47. > :20:51.if we did not, in that event, which I hope is unlikely, we would need to
:20:52. > :20:53.look at this again. I stress that I suspect there is some agreement
:20:54. > :20:56.between us here that it would be better if we could get a
:20:57. > :21:04.multilateral agreement and if we went off alone.
:21:05. > :21:06.I have heard the Minister say, I think, there will not be a
:21:07. > :21:11.multilateral agreement with the United States... We do not want to
:21:12. > :21:16.act unilaterally for the UK but will act unilaterally within the EU, or
:21:17. > :21:22.even if we are not in it, even the EU itself this 20% of the world's
:21:23. > :21:27.multinationals. It does not need to be multilateral but EU - lateral.
:21:28. > :21:33.I do not think it has to be universal but I think there are
:21:34. > :21:39.disadvantages for the UK, if the UK is the only country to do it. It
:21:40. > :21:47.comes down to this. It is the sense that UK companies would be looked at
:21:48. > :21:51.and criticised for failing to pay very much tax in jurisdictions where
:21:52. > :21:54.it did not have activities but had many sales. I think it would be
:21:55. > :21:58.easier, and comes back to the point about educating the public about how
:21:59. > :22:04.corporation tax works, I think it would be easier if there were a few
:22:05. > :22:08.other examples. It is not need to be every other country but if you could
:22:09. > :22:14.say, you know, Germany, France, Italy, they have it sadly the same
:22:15. > :22:20.type of -- essentially the same type of system... Every time a UK company
:22:21. > :22:26.is criticised, then we could say, what about the French or Italian
:22:27. > :22:30.company? What I would say to my honourable friend is, we do not have
:22:31. > :22:37.to move at the paste of the slowest but an isolated position here I
:22:38. > :22:43.think runs some reputation risks for the UK. -- the pace of the slowest.
:22:44. > :22:48.We do not need to... Given that there is good progress on this, I
:22:49. > :22:52.would urge as not to accept this but look to implement it, I would hope,
:22:53. > :22:58.over the next few months. On that point, it's the pens which
:22:59. > :23:03.multinationals are in which segment of the competition. -- it depends
:23:04. > :23:06.on. As long as two or three other countries were to do this, the UK
:23:07. > :23:11.would join in? A precise number... It is a
:23:12. > :23:15.threshold and depends on which countries it would be. I would have
:23:16. > :23:20.to say, if I thought there were three or four significant economies
:23:21. > :23:25.going in the same direction, then the case for doing it is much
:23:26. > :23:29.stronger. Put it in reverse, if I were standing here next year and two
:23:30. > :23:33.or three other countries had gone down that route, the concerns I have
:23:34. > :23:40.been expressing clearly carry less weight than they do today.
:23:41. > :23:46.Minister, I sent an open letter on behalf of the Public Accounts
:23:47. > :23:52.Committee to European finance chairs or the equivalent, and to date, as
:23:53. > :23:57.you may have picked up, it has been signed by the cheers of the
:23:58. > :24:01.parliamentary finance committees of Germany, Hungary, Finland, Norway
:24:02. > :24:05.and Slovakia, as well as senior MPs in the Netherlands, Czech Republic
:24:06. > :24:07.and Bulgaria. And we know the finance minister in France is doing
:24:08. > :24:12.interesting work in this area as are many others. Does this give help to
:24:13. > :24:15.helping the Minister, to push in the right direction to make a bit more
:24:16. > :24:24.than offer? It supports my optimism and we are
:24:25. > :24:31.on the cusp of a multilateral deal. In those circumstances, that, I
:24:32. > :24:34.think, enables us to work out the legislation in the most
:24:35. > :24:38.comprehensive and effective way. As I say, I think having looked at
:24:39. > :24:44.this, our preference would be to do this through company law rather than
:24:45. > :24:51.through a Finance Bill. But that supports the point I made earlier
:24:52. > :24:58.about the relevant EU Commissioner making comments at a meeting in
:24:59. > :25:03.Luxembourg 11 days ago, which is that he is optimistic that we will
:25:04. > :25:08.reach agreements by the end of the year. By the end of the calendar
:25:09. > :25:15.year, that is. If that is the case, that is hugely encouraging. What the
:25:16. > :25:23.honourable friend points out I think supports that position.
:25:24. > :25:27.If you are willing to channel the leadership enthusiasm on profits
:25:28. > :25:30.tax, where we chose to go alone and not wait for international
:25:31. > :25:34.agreements, and introduced a whole new tax with compliance burdens and
:25:35. > :25:39.penalties. I suspect that is a bigger deal than requiring companies
:25:40. > :25:42.to disclose what they already disclosed but in a slightly
:25:43. > :25:48.different format. That is the right way to go.
:25:49. > :25:51.He is right to highlight that we went ahead, although that was
:25:52. > :25:54.clearly consistent with the direction of the process. That also
:25:55. > :26:04.brought in significant revenue to the UK. I think that has been very
:26:05. > :26:10.helpful. The point I would make is that, if we want to... If we want to
:26:11. > :26:15.reach the point that I think all of us want, that there is much greater
:26:16. > :26:21.transparency, it is right to focus on international efforts on public
:26:22. > :26:24.reporting, and in order to get fraud information on foreign multinational
:26:25. > :26:31.entities and their activities, a multilateral agreement is required.
:26:32. > :26:36.We need conference comprehensive rules with the widest possible
:26:37. > :26:42.scale. A multilateral approach which applies consistently across UK and
:26:43. > :26:46.foreign multilateral entities, we must get this right, so when it is
:26:47. > :26:51.introduced into UK law, it is enforceable. We will continue to
:26:52. > :26:56.support and drive this multilateral change following the result of the
:26:57. > :27:02.referendum. I shared the determination that we cannot move at
:27:03. > :27:06.the pace of the slowest. I will give way one more time. I am conscious
:27:07. > :27:10.I'm taking up a lot of time in what was to be a short debate.
:27:11. > :27:16.The Minister has been generous in giving way. A final point on this. I
:27:17. > :27:20.am sure we agree with him it should be done multilaterally. There is
:27:21. > :27:24.nothing between us on that. It is helpful to his aim that he can
:27:25. > :27:27.demonstrate there is strong support across the House of Commons in
:27:28. > :27:31.support of this when he is dealing with international partners. As a
:27:32. > :27:35.suggestion, hopefully a helpful one, he might consider asking his
:27:36. > :27:41.officials to draft a clause that would not be defective, for public
:27:42. > :27:45.discussion, which you can print to his colleagues multilaterally as a
:27:46. > :27:50.clause they might wish to include in their parliamentary legislation.
:27:51. > :27:54.I'm grateful to my honourable friend. Let me take away that
:27:55. > :27:58.suggestion, because there are a number of ways in which this could
:27:59. > :28:03.potentially be done. We would want to consider it but I stress that I
:28:04. > :28:10.do think this debate this afternoon is helpful to parliamentary and
:28:11. > :28:14.governmental colleagues in other jurisdictions, looking at this
:28:15. > :28:18.issue, to demonstrate the determination, the cross-party
:28:19. > :28:22.determination to make progress on this. We are committed to acting
:28:23. > :28:26.swiftly to implement international agreement, as we have done with the
:28:27. > :28:31.OECD recommendations on country by country reporting. We are committed
:28:32. > :28:37.to improving the transparency of multinational tax affairs. But we
:28:38. > :28:43.support and effective, multilateral approach, at this time of increased
:28:44. > :28:47.uncertainty, a domestic measure would, I fear, disadvantage UK
:28:48. > :28:52.business for reasons I have outlined. Therefore, I look forward
:28:53. > :28:55.to hearing the contribution of the right honourable member for Don
:28:56. > :29:02.Valley, but I hope she is satisfied with the assurances I have provided
:29:03. > :29:08.today. Clause 150 and schedule 20 create penalties for those who have
:29:09. > :29:12.deliberately assisted taxpayers to evade inheritance tax, capital gains
:29:13. > :29:17.tax or income taxed by offshore means. The legislation introduces a
:29:18. > :29:26.financial penalty of up to 100% of evaded tax and public naming most
:29:27. > :29:32.serious cases. Now amendments 19 and 20, made by the opposition. The
:29:33. > :29:37.intentions of amendments 19 are twofold. The first is to ensure it
:29:38. > :29:45.is considered a Labour to act as an introducer. Sir Roger, schedule 20
:29:46. > :29:50.already covers this, so this part of the amendment is unnecessary. The
:29:51. > :29:53.second empty is to set a test that if it appears the advisers should
:29:54. > :29:59.have known the advice would enable offshore tax evasion, they would be
:30:00. > :30:02.an enabler. This test would introduce uncertainty, meaning it is
:30:03. > :30:09.unclear which due diligence should be completed. Amendment 20 similarly
:30:10. > :30:13.suggests that if the adviser failed to make enquiries, the reasonable
:30:14. > :30:20.and honest person would have made. Sir Roger, the court recognises that
:30:21. > :30:24.knowledge includes a blind eye knowledge, so-called, where a person
:30:25. > :30:30.has suspicion and deliberately decides not to find out more. This
:30:31. > :30:33.means an enabler cannot bury their head in the sand if they have
:30:34. > :30:39.reasons to think they are assisting evasion, failing to make proper
:30:40. > :30:43.enquiries, and they will be penalised under the schedule as it
:30:44. > :30:50.currently stands. Given the restrictions and uncertainty to the
:30:51. > :30:58.amendments 19 and 20, I urge honourable members to reject them.
:30:59. > :31:01.Let me turn to clauses 151-153, schedule 21 and 22, which
:31:02. > :31:05.strengthens civil sanctions levied on offshore tax evaders themselves.
:31:06. > :31:12.Close 151 will increase penalties for offshore tax evasion to 30% of
:31:13. > :31:21.tax due. The current minimum penalty is 20% and maximum penalty will
:31:22. > :31:24.remain up to 300% of tax due. Close 151 while seeking to minimise or
:31:25. > :31:31.register penalty, in to provide more information about evading abilities
:31:32. > :31:36.in cooperation with company Mac. Clause 152 says they should be named
:31:37. > :31:44.and less on offshore evader comes forward to HMR see voluntarily and
:31:45. > :31:50.makes a full disclosure. Clause 152 allows HMRC to name the individual
:31:51. > :31:55.who controls the country, which has participated in offshore tax
:31:56. > :31:59.evasion. Clause 153 introduces a new asset based penalty. This applies to
:32:00. > :32:04.the most serious cases of deliberate offshore tax evasion, where the tax
:32:05. > :32:08.loss exceeds ?25,000, and will levy a penalty of up to 10% of the value
:32:09. > :32:14.of the asset connected to the evasion. This could include physical
:32:15. > :32:17.property, intellectual property, shares and bank accounts. This
:32:18. > :32:21.asset-based penalty will be levied in addition to other penalties and
:32:22. > :32:27.interest is due. Taken together, these measures are applied HMRC with
:32:28. > :32:29.a greater understanding of tax evasion, while significantly
:32:30. > :32:34.increasing penalties and tax evaders and those who help them. Sir Roger,
:32:35. > :32:39.I would like to respond to five and six, which are concerned with
:32:40. > :32:44.reporting the number of tax evaders who have been named by HMRC and the
:32:45. > :32:49.number of asset based penalties levied. The asset-based penalty is
:32:50. > :32:56.expected to apply from 2016-17 tax year, would have drinks and naming
:32:57. > :33:01.provisions exposure to apply with the following year. -- it is
:33:02. > :33:04.expected the provisions will apply. As such, they will be no time for
:33:05. > :33:07.the activities covered by the amendments to have happened by the
:33:08. > :33:14.deadlines set for the Government to report. Sir Roger, this Government
:33:15. > :33:18.is taking action to further increase penalties on offshore tax evaders
:33:19. > :33:22.and those who enable them. However, it remains a consistent minority of
:33:23. > :33:26.taxpayers who continue to evade UK tax in this way. To tackle this
:33:27. > :33:32.minority, clause 154 introduces a new criminal offence for persistent
:33:33. > :33:39.offshore tax evasion. Crucially, the offence does not require prosecutors
:33:40. > :33:43.to insure the taxpayer intended to avoid tax offshore, increasing our
:33:44. > :33:48.ability to prosecute offshore tax evaders. A successful conviction can
:33:49. > :33:51.result in a fine of prison sentence of 26 months. Those who continue to
:33:52. > :33:56.break the rules it should face tougher sentence and this new
:33:57. > :34:02.offence will help ensure they do. I would like to briefly respond to new
:34:03. > :34:08.clauses seven, eight and nine. New course seven makes it required to
:34:09. > :34:13.publish a report on the new criminal offence in the year it is past. New
:34:14. > :34:18.criminal offences like this are expected to come in in 2017-18,
:34:19. > :34:20.beyond the deadline set out in the new clause so this new clause is
:34:21. > :35:32.redundant. New clause eight proposes to deal
:35:33. > :35:35.with the financial services industry. HMRC received over 125,000
:35:36. > :35:39.pieces of information from the public. The actions are subject to
:35:40. > :35:41.the independent scrutiny of the office of the surveillance
:35:42. > :35:44.Commissioner. I am satisfied this gives me good assurance it is
:35:45. > :35:46.working in this area and highly effective. We do not believe this is
:35:47. > :36:23.necessary and urgent members to reject this clause. As I read
:36:24. > :36:31.this can... In the end he could not leave his job, that is not good
:36:32. > :36:41.enough and I would honestly urge the Minister to think again about this
:36:42. > :36:48.and institute a review. I note the comments, we have discussed this
:36:49. > :36:52.before and I point her in the direction of Sir Andrew Parks's
:36:53. > :37:01.review of those settlements and the conclusions he reached in those
:37:02. > :37:13.respects. He will discuss this before and again and we will not
:37:14. > :37:18.reach agreement on that. I'm conscious this is a relatively short
:37:19. > :37:21.debate and I'm taking up a large proportion of it. I'm not yet quite
:37:22. > :37:28.done. I will take a short intervention. Surely from the back
:37:29. > :37:31.and of the NHS, where whistle-blowers have suffered the
:37:32. > :37:36.same detriment and the government is trying to change their attitude, I
:37:37. > :37:41.don't understand why we would not want to support whistle-blowers
:37:42. > :37:49.within the industry when we know we've had one scandal after another
:37:50. > :37:55.for the last decade. I think we should make the point to heard that
:37:56. > :38:07.the sheer scale of the level of information provided to HMRC, by no
:38:08. > :38:11.means are all of those whistle-blowers, but certainly, HMRC
:38:12. > :38:18.does receive substantial amounts of information from whistle-blowers
:38:19. > :38:31.which is very helpful to it. In terms of how that works and the
:38:32. > :38:35.contribution to HMRC's activities, the existing provisions regarding
:38:36. > :38:40.whistle-blowers, these matters are always kept under review and I
:38:41. > :38:45.thought there was a strong case for returning to this issue I would
:38:46. > :38:49.certainly be interested in doing so but I'm certainly not hearing that
:38:50. > :38:55.at present. The Right Honourable member for Barking has waited very
:38:56. > :38:59.patiently before I turn to the new clause, number nine, which would
:39:00. > :39:16.require the government to estimate the impact on the tax gap.
:39:17. > :39:22.I don't believe this would be effective in achieving its aims, it
:39:23. > :39:29.would focus on trading levels in the UK. As the Prime Minister announced
:39:30. > :39:37.at the recent anti-corruption Summit last month, the Crown dependency and
:39:38. > :39:45.overseas territory will look at all companies in their jurisdiction.
:39:46. > :39:49.They will sheer this information with HMRC and law enforcement
:39:50. > :39:57.agencies. Our authorities will see who owns and controls companies. I
:39:58. > :40:08.understand the aims of this new clause. It will be less effective
:40:09. > :40:13.than the steps we've already taken. We will hear from the Right
:40:14. > :40:22.Honourable gentleman but I am not persuaded by it. I won't take up any
:40:23. > :40:31.more time with the committee, I've tried to the as clear as I could,
:40:32. > :40:37.but I hope the amendments can stand part of the bill. The question is
:40:38. > :40:44.government amendment 114 be made to the house. I will try to be brief
:40:45. > :40:48.but there is a lot to get through. I know the chamber has many members
:40:49. > :40:54.but particularly today we have a profligacy of right honourable
:40:55. > :41:00.members with us, particularly on the opposition benches. Those listening,
:41:01. > :41:07.I will need to be brief. Labour does not pause clause 100 44. Clause 145,
:41:08. > :41:11.would like some assurance from the Minister that there are enough staff
:41:12. > :41:21.to deal with this. I realised the government has gone into reverse
:41:22. > :41:28.gear. Each MRC was significantly underperforming through being
:41:29. > :41:34.understaffed. I should like some reassurance on that. One clause 146,
:41:35. > :41:42.penalties for the anti-abuse rule. The child institute of taxation, who
:41:43. > :41:49.have been helpful to all members, particularly opposition front bench,
:41:50. > :41:58.they are concerned on the penalties referred to in 146, and that someone
:41:59. > :42:07.will be punished for an error of judgment. I understand they found it
:42:08. > :42:16.was to do with Customs and Excise rather than income tax. Perhaps the
:42:17. > :42:24.Minister could clarify. On clause 146, amendment four, the deal with
:42:25. > :42:31.raising the penalty from 60% to 100%. I am concerned that the
:42:32. > :42:38.penalties would not be sufficient, a range of penalties available to
:42:39. > :42:42.change behaviour and encourage socially acceptable compliance
:42:43. > :42:51.behaviour, which I think is what all of us want to see. In terms of
:42:52. > :42:55.serial tax avoidance, the chartered as two of taxation is concerned
:42:56. > :43:01.here, and I understand their point, but this clause might effectively
:43:02. > :43:08.introduce a double penalty for an individual. Generally we tried to
:43:09. > :43:19.avoid double penalties. Perhaps the Minister could clarify that there is
:43:20. > :43:26.no such double penalty. If the Minister could give an indication,
:43:27. > :43:32.and these things are difficult, of how many non-taxpayers the
:43:33. > :43:45.government thinks the system, how many of them will mend their ways.
:43:46. > :43:51.Again, there is the funding. In terms of 148, tax avoidance schemes,
:43:52. > :43:57.the Labour front bench supports this. In terms of clause 149, which
:43:58. > :44:05.deals with special measures, the Labour front bench supports that. We
:44:06. > :44:10.have put forward some amendments, 5-18, to which the Minister referred
:44:11. > :44:15.when speaking earlier. Those amendments deal with increasing the
:44:16. > :44:23.penalty and for joint and several liability. The Minister said, and I
:44:24. > :44:26.found this strange, he said, the government was in the business of
:44:27. > :44:32.encouraging behavioural change. So are we. Having higher penalties
:44:33. > :44:35.could encourage behavioural change. Someone not indulging in bad
:44:36. > :44:44.behaviour but filing the reports and so on. All directors would be aware
:44:45. > :44:48.and similarly, in terms of the penalties in which, if they were
:44:49. > :44:56.levied, would not be reimbursable. Too often the case that companies
:44:57. > :45:05.simply reimburse their staff when they have engaged in non-criminal
:45:06. > :45:16.wrongdoing. With 149 comes amendment one. My right honourable friend will
:45:17. > :45:22.be speaking on amendment one. I will say a couple of things briefly. He
:45:23. > :45:25.said it is technically flawed. That may be the case but I need to say to
:45:26. > :45:30.the Minister, this is amendment number one. There are almost 200
:45:31. > :45:39.amendments. If the government supported it they could have
:45:40. > :45:52.corrected any technical flaws. I think the government is being timid.
:45:53. > :45:57.I do not see the these as leading to disadvantage to UK headquartered
:45:58. > :46:04.companies. Quite the reverse. In the United Kingdom, whether the minister
:46:05. > :46:07.likes it or not, the reputation of Google was adversely affected in the
:46:08. > :46:17.United Kingdom because of attacks deal done with the UK authorities
:46:18. > :46:21.which was not transparent. If there had been more transparency then
:46:22. > :46:33.perhaps their reputation would not have been at firstly affected. I
:46:34. > :46:44.would say, I cannot resist saying this, he's a good minister. In our
:46:45. > :46:53.society, talking the talk, can I urge him to do it. Support amendment
:46:54. > :47:06.one. Sort out the technicalities. In terms of clause 150, this is a bit
:47:07. > :47:16.of a gallop, I apologise, in terms of this clause and schedule 20, I
:47:17. > :47:29.heard what the Minister said about 19 and 20. I defer to his superior
:47:30. > :47:34.knowledge. What was proposed in amendment 19, already covered in the
:47:35. > :47:40.schedule, he referred to in relation to amendment 20 what he called blind
:47:41. > :47:58.eye knowledge. That is a new one to me. It seems to be introducing civil
:47:59. > :48:09.penalties now, not criminal ones. This brings me on to 151, to do with
:48:10. > :48:16.offshore transfers. The Labour front bench support that. In 152,
:48:17. > :48:26.publishing details of deliberate tax falters, the explanatory notes say
:48:27. > :48:33.this will amend the finance act to allow HMRC the power to publish
:48:34. > :48:43.details of anyone charged with deliberate failure to notice by --
:48:44. > :48:53.notify HMRC of a change in tax. This must involve an offshore transfer.
:48:54. > :48:56.This would be HMRC publishing details of knotty taxpayers or
:48:57. > :49:06.naughty non-taxpayers. Can I urge the government to think when HMRC,
:49:07. > :49:11.not under control of the government, to look again at the issue of
:49:12. > :49:16.taxpayer confident shallot tea and went deals are being done, with
:49:17. > :49:21.large companies as opposed to individuals, that those deals
:49:22. > :49:27.include within them as part of HMRC's bargaining a waiver of
:49:28. > :49:33.confidentiality on the deal. On the notorious Google tax deal, where the
:49:34. > :49:37.Chancellor of the Exchequer said he could not tell us how he got to the
:49:38. > :49:46.deal cause it was confidential, it was true because each MRC failed --
:49:47. > :49:54.HMRC field to insert a waiver of confidentiality. That should be in
:49:55. > :49:58.those kind of settlements, such as should have been within the
:49:59. > :50:00.appalling settlement under a Labour government, I'm ashamed to say, with
:50:01. > :50:11.Ford phone. In terms of clause 152, new clause
:50:12. > :50:17.four, tabled by my honourable friend, relates to this, a report of
:50:18. > :50:21.the general anti-abuse rule. I am sorry the Government is apparently
:50:22. > :50:26.not going to accept that. I understand, in that connection, what
:50:27. > :50:30.the Government has said about new clauses, five, six, and seven, that
:50:31. > :50:36.the time frames within those would be meaningless because the reports
:50:37. > :50:40.would be... Would have to be done before the measures of which they
:50:41. > :50:44.were reporting being implemented. I understand that but did not
:50:45. > :50:48.understand the Minister putting that in relation to new clause four, but
:50:49. > :50:52.if you did, perhaps you could clarify in the summing up that this
:50:53. > :50:58.is not a deadline issue as it was with five, six, and also seven.
:50:59. > :51:05.Perhaps he will confirm the Government will support four, unless
:51:06. > :51:09.there is that deadline issue. Clause 153, quite interesting, for those of
:51:10. > :51:14.us on these benches who like to try to think widely on tax measures.
:51:15. > :51:19.Because it is a small step towards a wealth tax. That may not be the
:51:20. > :51:24.governmental intention and I am not saying that is the Labour bench's
:51:25. > :51:29.proposal on taxes. We are looking at things broadly but this is because
:51:30. > :51:34.there are asset-based penalties for offshore in accuracy is and Phil
:51:35. > :51:41.yours introduced via clause 153 and schedule 22. -- they'll years. In
:51:42. > :51:45.that connection, I would like to raise an issue that was raised with
:51:46. > :51:49.me by the Law Society of England and Wales. --. I am a member in good
:51:50. > :51:55.standing of that organisation as I suspect the Minister is and the rays
:51:56. > :52:00.that. If we're talking about asset-based penalties, how does one
:52:01. > :52:03.value the asset in terms of the mechanism for its valuation, but
:52:04. > :52:14.also for assets which fluctuate in value? Moving on to clause 154,
:52:15. > :52:21.Labour supports this clause. Offences relating to offshore income
:52:22. > :52:26.assets and activities, in this clause. The Minister has already
:52:27. > :52:32.responded to 147 which will be coupled with 154, where he points
:52:33. > :52:36.out the deadlines would not marry up when the report comes in effect. I
:52:37. > :52:43.apologise to the House for not spotting that. I think that brings
:52:44. > :52:48.me on, having done 154, two amendment tabled by the Right
:52:49. > :52:51.honourable member for Barking, the amendment clause nine, which the
:52:52. > :52:57.Labour bench supports. I will let the right honourable member, if she
:52:58. > :53:04.catches your eye, Sir Roger, explain to the house the necessity and
:53:05. > :53:08.desirability of that new clause. Thank you, Sir Roger. In light of
:53:09. > :53:12.the debate we are having this morning, I think an appropriate
:53:13. > :53:17.opening remark, that I believe that in the next few hours, next one hour
:53:18. > :53:21.perhaps of what is left, we are debating the most important part of
:53:22. > :53:29.the Finance Bill this year. There has been a lot of amendments talked
:53:30. > :53:34.about already this morning. I'm sure you will forgive me I make my
:53:35. > :53:37.remarks very brief and focused only on three matters. I shall focus on
:53:38. > :53:43.the appropriate changes as discussed in amendment one, in the name of the
:53:44. > :53:47.right honourable member from Don Valley and others. New clause eight
:53:48. > :53:52.and new clause nine in the name of the rate honourable member for
:53:53. > :53:56.barking and others. -- right honourable member. The SNP supports
:53:57. > :54:02.both of the amendments and new clauses being moved. I will be brief
:54:03. > :54:05.because I want to allow more time for the honourable members to
:54:06. > :54:10.present their case as fully as they are able. If I can say something
:54:11. > :54:15.generally, while you are concerned about this, we all know there is a
:54:16. > :54:19.concern amongst the public about tax evasion and hidden wealth. It was a
:54:20. > :54:24.growing concern before the release of the Panama Papers. Are member
:54:25. > :54:29.discussing this myself in the first week of February in this house. -- I
:54:30. > :54:34.remember. It has been fuelled by concerns as people become more aware
:54:35. > :54:38.of the hiding of money in tax havens by individuals, corporations and
:54:39. > :54:46.trusts. Let us but this debate into some broader context. According to
:54:47. > :54:49.the London School of economics' representative, tax havens- one
:54:50. > :54:57.sixth of the world's total Private wealth. The estimated that around
:54:58. > :55:02.$20 trillion. -- yes the major as that. Whether that is accurate, all
:55:03. > :55:11.members will agree that the amount of money is staggering in scale.
:55:12. > :55:15.Indeed, the Panama Papers of Mossad Fonseca are just the tip of the
:55:16. > :55:19.iceberg of what we face in the world today. There are many issues which
:55:20. > :55:25.require addressing and neither in this debate nor in all the proposed
:55:26. > :55:30.amendments and new clauses are all the issues addressed. But they are a
:55:31. > :55:35.start and I must say I have been disappointed by some of the
:55:36. > :55:37.Minister's reasoning around, particularly, amendment one. It
:55:38. > :55:41.struck me that he started to redefine at least three times in
:55:42. > :55:48.different ways what he meant by multinational. First of all, it
:55:49. > :55:53.seemed too, in my view, have been speaking that it was global and then
:55:54. > :55:56.became EU specific and then became noticed in new countries in relation
:55:57. > :55:59.to that. It struck me that it is not that amendment one has not been
:56:00. > :56:02.thought through but that the Government response to amendment one
:56:03. > :56:09.has not been thought through as thoroughly as we might have
:56:10. > :56:13.expected. I certainly would be encouraging if the Right honourable
:56:14. > :56:21.lady proposes to press it to a vote we will these be following into the
:56:22. > :56:25.lobbies. We know there are many groups involved in this. These
:56:26. > :56:29.amendments referred specifically to corporations but there is more than
:56:30. > :56:35.corporations that are involved. Indeed, if we end up putting in own
:56:36. > :56:39.amendments. -- if we had put in amendments they would have been
:56:40. > :56:41.broader in nature to encompass trust, for example. Being
:56:42. > :56:45.reasonable, we have to put ourselves reasonable, we have to put ourselves
:56:46. > :56:49.in a position where we make the first step. Sometimes somebody needs
:56:50. > :56:54.to make the first step. When the Minister was talking, you amended me
:56:55. > :56:59.of the days when I used to trod through the library at Stirling
:57:00. > :57:03.University, taking some students and join them back copies of Hansard.
:57:04. > :57:07.There you can get back copies of Hansard from the 18th and
:57:08. > :57:12.19th-century, and the subject which rose more than any other debate in
:57:13. > :57:18.that house was slavery. One of the arguments continually used against
:57:19. > :57:23.doing something to make a slavery illegal was precisely because it
:57:24. > :57:29.wouldn't create a level playing field. Somebody, on some occasions,
:57:30. > :57:34.has to be first. This is not just about finance and technical
:57:35. > :57:37.considerations but fundamental ethical considerations involved in
:57:38. > :57:40.this, and it is because of the ethical considerations that we
:57:41. > :57:44.believe these matters hopefully will be pressed of the vote and we will
:57:45. > :57:50.support the right honourable ladies in doing so.
:57:51. > :57:57.He has right that somebody has to go first. The only thought I had is
:57:58. > :58:03.that this country -- his country relies heavily on the oil industry.
:58:04. > :58:06.Is he certain it is right to impose something on Shell and BP that the
:58:07. > :58:11.Italian Government might impose on BMI and the French Government want
:58:12. > :58:17.impose on the other company? What is his view on that?
:58:18. > :58:24.I think... I think, in these matters, going beyond and taking a
:58:25. > :58:28.look at all large corporations that operate internationally. I can
:58:29. > :58:34.understand the point being made and I understand the point being made by
:58:35. > :58:39.the Minister. Sure, there might be occasions where creating the first
:58:40. > :58:42.step appears to put people at some short-term commercial disadvantage,
:58:43. > :58:48.but I also think it puts them at a reputational advantage. If they are
:58:49. > :58:53.seen to lead the way... I don't think it is as simple as saying you
:58:54. > :58:56.are necessarily currying commercial disadvantage. For those reasons, I
:58:57. > :59:03.would say we would welcome these clauses. As they would apply, we are
:59:04. > :59:06.very aware they will apply to important sectors of the Scottish
:59:07. > :59:14.economy as well. If I briefly say something about whistle-blowing, the
:59:15. > :59:21.amendment which the SNP made. I was grateful for the intervention by the
:59:22. > :59:28.Right honourable lady from Barking. And the way in which she asked the
:59:29. > :59:33.minister about this situation and why he was not supportive of this
:59:34. > :59:38.clause. Indeed, as she spoke, I thought what might be best is if,
:59:39. > :59:45.rather than as pushing this new clause to a vote here, what we may
:59:46. > :59:50.do is engage in cross-party discussions as to how best we could
:59:51. > :59:53.construct a thorough way forward. Because I agree wholeheartedly with
:59:54. > :00:00.her. When we look at the number of cases taken to court, that have been
:00:01. > :00:04.about taking the whistle-blowers to court, a person wonders about the
:00:05. > :00:11.way in which the balance and the skills of justice lie at the moment.
:00:12. > :00:14.-- the scales of justice. I do recognise there have been changes
:00:15. > :00:20.made to the requirements of whistle-blowing, and some come into
:00:21. > :00:24.effect this September. But when you look at the requirements in place,
:00:25. > :00:28.the requirements are obligations on companies to do things like appoint
:00:29. > :00:34.your own champion of whistle-blowers. Report to your own
:00:35. > :00:39.board of a company about the amount of whistle-blowing that is going on.
:00:40. > :00:44.These things require a culture within companies willing to do that.
:00:45. > :00:51.If the will is not there, the current processes will have next to
:00:52. > :00:55.no effect. We are not saying we know precisely the best way in which we
:00:56. > :00:58.can secure effective whistle-blowing, and that is why I
:00:59. > :01:04.think it would be useful to have some cross-party discussions about
:01:05. > :01:08.this, which I am sure the right honourable lady would be happy to
:01:09. > :01:12.engage in. Although we believe in this clause, we will, in this
:01:13. > :01:15.spirit, not press that to a vote but look forward to supporting the those
:01:16. > :01:20.led by the two right honourable ladies.
:01:21. > :01:24.Thank you, Sir Roger, and I beg to support amendment one in my name and
:01:25. > :01:29.in those of my honourable friends, the members for Hackney South and
:01:30. > :01:32.Shoreditch, Sunderland South, and Amber Valley Southport and Edinburgh
:01:33. > :01:36.North and Leith. I am grateful for the support from six other members
:01:37. > :01:42.of the Public Accounts Committee who signed this amendment, namely the
:01:43. > :01:46.members for Bristol South and Berwick-upon-Tweed, South Norfolk,
:01:47. > :01:52.Peterborough and Warrington South. In total, I think 77 names of right
:01:53. > :01:57.honourable members have signed the amendment. It is a pleasure to
:01:58. > :02:01.follow the honourable member for Kirkaldy. Apart from my own party
:02:02. > :02:03.support for which I am extremely great for, particularly from my
:02:04. > :02:12.honourable friend from Wolverhampton South West, who has been fantastic
:02:13. > :02:17.in his liaison and advice. The SDLP, Plaid Cymru, the Green Party, Ukip
:02:18. > :02:20.and SNP honourable members, alongside a number of Conservative
:02:21. > :02:24.members and the independent honourable member for North Down.
:02:25. > :02:28.There is truly cross-party support across this has and I'm grateful to
:02:29. > :02:32.all those members of all those parties for their support. It also
:02:33. > :02:36.has the welcome support of the business led fair attacks mark and
:02:37. > :02:41.the tax Justice network, and support development charity such as Oxfam,
:02:42. > :02:45.action aid, the one campaign and save the children. It is
:02:46. > :02:49.understandable, given the momentous events of recent days, creating
:02:50. > :02:53.ripples that reach all corners of the nations and across parties, if
:02:54. > :02:56.numbers of this House are distracted from the business we are debating
:02:57. > :03:00.today. Let me be clear what is at stake. If this amendment is passed,
:03:01. > :03:04.the Government requirement that accompanies public their group tax
:03:05. > :03:08.strategy on their website will include for large multinational
:03:09. > :03:11.enterprises with a base in the UK, headline details required on their
:03:12. > :03:14.revenues and taxes paid in accordance with the OECD
:03:15. > :03:22.requirements for country by country reporting. This is the parliament's
:03:23. > :03:24.Google moment. I would like to clarify something. Everything this
:03:25. > :03:27.amendment requires by being published is already what is
:03:28. > :03:32.required by the Government to be reported to HMRC. Yes, I agree with
:03:33. > :03:37.the minister that it does not require and achieve worldwide
:03:38. > :03:44.reporting for any multinational enterprise but -- but also those
:03:45. > :03:46.that are over a certain size and have a turnover of over ?600 million
:03:47. > :04:01.per year. She did say the company would need
:04:02. > :04:09.to produce the tax on the website. What ever company does not have a
:04:10. > :04:15.website? Is that a potential loophole? I hope the companies we
:04:16. > :04:20.are talking about would be good enough -- big enough to have a
:04:21. > :04:23.website but if not, we might get an opportunity to discuss that later.
:04:24. > :04:29.But if they did not have a website, they are on a hiding to nothing. It
:04:30. > :04:34.seems to me. It's very important because the Minister tried to
:04:35. > :04:38.suggest this would only be for UK-based companies. It is in line
:04:39. > :04:44.with the guidance from HMRC already effectively reporting strategies. It
:04:45. > :04:48.includes those over a certain turnover. We are working with the
:04:49. > :04:53.grain of where the government has proceeded on these very important
:04:54. > :05:01.areas. We know there is widespread concern in a house across parties
:05:02. > :05:06.that multinationals operate. The greatest weapon of the multinational
:05:07. > :05:11.enterprise is tax arrangements being shrouded in secrecy. The problem is,
:05:12. > :05:20.in the world we live in, as leaks emerge, it is death by a thousand
:05:21. > :05:23.cuts. This is about saying, let's get the businesses back contract.
:05:24. > :05:28.This is not just good for businesses but about making sure they have a
:05:29. > :05:34.chance to set out their claim and what they are doing in a very public
:05:35. > :05:38.way. We know that governments across the world face a very particular
:05:39. > :05:46.problem with these multinationals. The problem is the shifting to areas
:05:47. > :05:54.with no corporate tax rates. Why in 2010 Deborah Meaden have profit but
:05:55. > :06:00.were equivalent -- why did Bermuda... Is there something odd
:06:01. > :06:05.about a company, for example Google, with huge numbers of staff in one
:06:06. > :06:09.country but all the revenue in another. It would not be surprising
:06:10. > :06:18.to find the revenues were in a country with 12.5% tax rate as
:06:19. > :06:26.opposed to the UK. We can agree this is unethical manipulation of tax
:06:27. > :06:33.rules. As has been pointed out, the impact creates unfair competition
:06:34. > :06:38.with these multinational Enterprises transfer profits to the tax
:06:39. > :06:47.dominions to gain an advantage over a rival. We want to lower that --
:06:48. > :06:54.level that playing field. The whole house supported the Chancellor's
:06:55. > :07:01.legislation to require financial reporting for UK-based
:07:02. > :07:05.internationals and UK unit where the parent company is in a country where
:07:06. > :07:11.the country does not agree to country by country reporting. This
:07:12. > :07:14.would include showing each tax jurisdiction the amount of revenue,
:07:15. > :07:19.profit before income tax and income tax paid and accrued and their total
:07:20. > :07:22.employment capital retained earnings and intangible assets. They'll also
:07:23. > :07:28.be required to identify each entity within the group doing business in a
:07:29. > :07:31.particular tax jurisdiction and provide an indication of business
:07:32. > :07:37.activities within a selection of broad areas which each entity
:07:38. > :07:44.engages in. This information is already required to be provided to
:07:45. > :07:52.HMRC. We are saying, let's go public. I want HMRC to be armed with
:07:53. > :07:55.the necessary information. We need more than HMRC to have a
:07:56. > :08:02.confidential look. We deserve to see the bigger picture. Publishing is
:08:03. > :08:08.one way to persuade these companies to restore the corporate reputation.
:08:09. > :08:11.Was it because of the extraordinary focus on Google that Facebook
:08:12. > :08:15.announced a welcome change to the recording of its profits in the UK?
:08:16. > :08:21.I believe so. The company is reporting profits in tax havens
:08:22. > :08:26.rarely have a PO box and the nameplate, but we want to know that?
:08:27. > :08:30.Let's follow our convictions, do what we know to be right, Shine a
:08:31. > :08:35.light on the activities of these large multinationals who run rings
:08:36. > :08:39.around Revenue and Customs authorities around the world. Let's
:08:40. > :08:47.not flinch or play for time and hope that some international agreement
:08:48. > :08:53.will be reached eventually. I would remind members but so often we heard
:08:54. > :08:59.a lot from both sides about our Parliament's sovereignty, and our
:09:00. > :09:03.power to make laws. This is the test. As Britain is still a leader
:09:04. > :09:07.or are we followers? This amendment is a pro-business measure. It would
:09:08. > :09:14.be Parliament saying every business must play by the same set of rules.
:09:15. > :09:19.The tide of opinion is changing in the business world. This week I've
:09:20. > :09:26.received support from SSE for the principal. I'm delighted major firms
:09:27. > :09:33.sign up to the fair tax mark and pledge never to use tax havens.
:09:34. > :09:36.Since 2014, a quarter of the FTSE 100 companies have published
:09:37. > :09:38.information about their tax arrangements and long-standing
:09:39. > :09:43.British firms like Barclays are among them. I commend the Minister
:09:44. > :09:48.for the steps taken in the last six years to improve the level of
:09:49. > :10:01.transparency and the clamp-down on the secretive tax deals. Don't we
:10:02. > :10:10.know what the googles of this world will be hoping? We will demand more
:10:11. > :10:16.openness. This house knows what those who want via taxes I like that
:10:17. > :10:23.are like. Every right honourable member knows what their constituents
:10:24. > :10:32.would say about these firms. Let's spare a thought for developing
:10:33. > :10:42.countries who lose as much in lost tax revenue as they receive in
:10:43. > :10:44.welfare. That cannot be right. In February the Chancellor said we
:10:45. > :10:49.should be moving to country by country reporting. The UK will seek
:10:50. > :10:53.to promote this internationally. I hear what the Minister is saying but
:10:54. > :10:57.there comes a point when we need to show leadership and much of the
:10:58. > :11:00.rules covering the tax and other rules affecting companies are not
:11:01. > :11:08.applied worldwide, they are British, home-grown rules that seek to
:11:09. > :11:19.provide fairness as well as, edition. Whilst I welcome the news,
:11:20. > :11:24.that is another debate for another day. The truth is, unfortunately the
:11:25. > :11:34.present state of the European Union does not tackle the problems of
:11:35. > :11:40.those developing countries that lose out. They've not publish the
:11:41. > :11:50.information on the activities that countries, what companies do in
:11:51. > :11:55.those countries. I say to the Minister and the Chancellor, this
:11:56. > :12:04.will be part of your legacy, a chance to lead were other come --
:12:05. > :12:11.countries will follow. I humbly request a division on this amendment
:12:12. > :12:17.and I urge the Minister to join the members of nine parties in the lobby
:12:18. > :12:21.with me to make a historic change. In years to come we will be
:12:22. > :12:28.wondering why we did not do this earlier. Let's see the British
:12:29. > :12:35.Parliament rower. I urge this house to support the amendment. To follow
:12:36. > :12:38.the honourable lady and support the amendment I will not seek to repeat
:12:39. > :12:44.the arguments she made so eloquently but I'd like to make a few separate
:12:45. > :12:48.points. Those of us who regard the UK as a great place to do business,
:12:49. > :12:53.want to attract businesses and encourage businesses in the UK to go
:12:54. > :12:57.overseas, need to recognise we need the sort of business climate where
:12:58. > :13:04.people can feel confident to compete here and we have a respected
:13:05. > :13:07.financial system, tax system, respected market where people
:13:08. > :13:11.operating here are seen to be behaving properly. I don't think
:13:12. > :13:15.from what we've gone through the last few years, when we keep finding
:13:16. > :13:21.a large multinational companies have been misbehaving, then those
:13:22. > :13:29.companies get hauled through the press and Parliamentary committees,
:13:30. > :13:32.is not since early -- necessarily the right way of improving business
:13:33. > :13:36.climate. We need to show the companies that are based and operate
:13:37. > :13:40.here are following the rules and the ones not following the rules will
:13:41. > :13:51.get caught and dealt with. It will be strongly encouraged to change
:13:52. > :13:57.your behaviour. Running and hiding will not help, it is us who have
:13:58. > :14:08.been in the lead on this. We've been making these countries change their
:14:09. > :14:18.behaviour. It will not work because we are one of the main global
:14:19. > :14:24.financial centres. We have a need to set an example and say, if you want
:14:25. > :14:30.to be based here we want you to behave ethically. I've no problem
:14:31. > :14:35.with UK-based companies trading in low tax jurisdictions. If they have
:14:36. > :14:40.assets and employees there that is their right. But we need to make
:14:41. > :14:46.sure they are actually doing that so we can see what they are doing, what
:14:47. > :14:50.they are reporting, not just trying to hide profit. I welcome this
:14:51. > :15:00.measure and this transparency. I don't believe some of the bleak
:15:01. > :15:05.competition warnings. This will only apply to companies with turnover of
:15:06. > :15:15.more than 750 million euros. I would not like to guess what that was in
:15:16. > :15:19.sterling. I will be surprised if many companies that size have major
:15:20. > :15:32.trading activities in other developed countries. Like having a
:15:33. > :15:38.subsidiary. If they do that, I suspect they will be public so
:15:39. > :15:42.people will know the turnover. They will know what the tax is that is
:15:43. > :15:49.being reported and the activities are. You need to have this analysis
:15:50. > :15:54.which shows where you're operating in the world. We are not creating a
:15:55. > :15:57.new set of disclosures that don't exist, we are trying to enhance the
:15:58. > :16:11.ones we have and make them work. If you look at the major sectors, you
:16:12. > :16:21.find one. The idea was we got some of this disclosure so we knew who
:16:22. > :16:26.was operating where. I don't believe for these very large companies we
:16:27. > :16:30.are talking about, the vast majority of which are trading ethically, that
:16:31. > :16:39.this will be much of a hardship for them. It will put it into one
:16:40. > :16:43.document where people can read it and see it and discuss it
:16:44. > :16:51.transparently. If you are in the UK and you make a few sales, everyone
:16:52. > :16:56.will understand there is no reason you should pay French corporation
:16:57. > :17:01.tax. There is no reason why anyone selling to hear from France would be
:17:02. > :17:04.UK corporation tax. We can make that clear. What we want to know is those
:17:05. > :17:11.companies that have a very large amount of turnover and very few
:17:12. > :17:16.assets and employees, so we can work out whether they are doing that
:17:17. > :17:23.legally. It might be that they are. It might be that somebody in and C
:17:24. > :17:28.has invented a product and is taking in royalties. That is fair enough. I
:17:29. > :17:34.suspect there are not many of those period to the amount of money in
:17:35. > :17:40.those jurisdictions. The least when we have it transparent they can
:17:41. > :17:45.defend themselves. We will know when they are misbehaving and whether we
:17:46. > :17:59.can buy from them or not. This is something we should do. It is not
:18:00. > :18:05.quite the perfect way of doing it. I'd urge the government to come
:18:06. > :18:14.forward with a bill that would do something. It will not be perfect,
:18:15. > :18:19.perhaps we will not be completely assured, we will need to make sure
:18:20. > :18:26.they have not missed off a few territories. I suspect there will be
:18:27. > :18:35.penalties for not publishing the full statement but not what is
:18:36. > :18:44.published in this. Maybe if we are getting the same thing there will
:18:45. > :18:49.need to be more transparency. We could make this better. It would be
:18:50. > :18:57.better if we had this EU wide. Perhaps I'm the only person in the
:18:58. > :19:06.chamber welcoming this. Tax was always meant to be a member state
:19:07. > :19:09.capacity. If we want to wait a short period to have it done in some
:19:10. > :19:14.consistent format across the whole of Europe I don't mind if the
:19:15. > :19:19.publication of this is 2018. We could at least have a clause that
:19:20. > :19:23.says the UK will do this, we will do this from 2018 unless the EU does
:19:24. > :19:27.something that applies here before that, in which case we could repeal
:19:28. > :19:34.that clause. That's not where we are. We have a choice. We can pass
:19:35. > :19:38.it or do nothing and wait and hope that somewhere else, someone will
:19:39. > :19:44.take the lead on something we have been leading on. Our government has
:19:45. > :19:51.introduced new tax to stop corporations abusing this. I'm not
:19:52. > :19:57.sure these are as displacing as the new tax was so I'm not sure why we
:19:58. > :20:01.are being cautious. Right way forward here is to be united behind
:20:02. > :20:08.this and the government to say, on reflection, we will bring forward a
:20:09. > :20:14.clause which achieves this in the right way. I hope the Minister
:20:15. > :20:20.thinks that is the right way forward. Can show us that we are
:20:21. > :20:21.behind the policy. If we cannot do that I will be supporting the
:20:22. > :20:32.clause. Thank you for calling me. I am
:20:33. > :20:36.grateful that the amendment, is supported by MPs across the Chamber
:20:37. > :20:41.and by a range of charities and voluntary organisations. I think the
:20:42. > :20:45.way in which she has preferred this has been excellent. I wish I had
:20:46. > :20:53.done this as well but I was a little distracted by other issues. Because
:20:54. > :20:58.in my name and others would require the Chancellor to publish the impact
:20:59. > :21:01.of levels of tax avoidance and evasion and extending the current
:21:02. > :21:08.report requirement on UK-based companies to publish information to
:21:09. > :21:11.companies in Corporation in Crown dependencies and overseas
:21:12. > :21:16.territories which have significant levels of trading activity in the
:21:17. > :21:21.UK. The purpose of this clause is to take forward the commitment of the
:21:22. > :21:26.Prime Minister to have publicly available registers of beneficial
:21:27. > :21:31.ownership for all of the Crown dependencies and overseas
:21:32. > :21:34.territories. It is very difficult to estimate the amount of money held in
:21:35. > :21:39.tax havens, as other people have said. Some estimates have put
:21:40. > :21:46.private financial wealth in tax havens between 21 billion and 32
:21:47. > :21:51.billion, untaxed or very likely tax. The French by Minister estimated
:21:52. > :21:57.that last year, $7.6 trillion of money was held offshore, which is
:21:58. > :22:00.the equivalent of the US budget for two years, and the OECD has
:22:01. > :22:06.estimated tax havens might cost in developing countries are some of up
:22:07. > :22:15.to three times the global aid budget. We are talking big, big, big
:22:16. > :22:19.sums. We also saw from the Panama Papers how much of the money that is
:22:20. > :22:29.held offshore is held in UK tax havens. Of the 214,000 British bank
:22:30. > :22:34.accounts exposed in the Panama Papers over half were registered in
:22:35. > :22:41.the British Virgin Islands. I call on members of the House, your
:22:42. > :22:44.attention to another interesting piece of data you can get hold of
:22:45. > :22:51.this year the role of tax havens and overseas territories. A World Bank
:22:52. > :22:58.review which looked at a corruption cases over a 30 year period from
:22:59. > :23:01.1982-2010... We are leaving the House of Commons to go live to the
:23:02. > :23:07.Scottish Parliament were First Minister Nicola Sturgeon will make a
:23:08. > :23:13.statement on the UK referendum on the EU. I would ask any member who
:23:14. > :23:21.wishes to speak against the motion to press request to speak button now
:23:22. > :23:22.and I call on Joe Fitzpatrick to move the motion. No member