Income Tax

Debate between Lord Teverson and Lord Newby

Wednesday 19th November 2014 Lords Chamber

[Lord Newby]

My Lords, the Government support the principle of paying the minimum wage. A number of government departments are already doing it and others are considering introducing it.

[Lord Teverson (LD)]

My Lords, what progress are the Government making on multinational corporate taxation to ensure that UK-domiciled companies are not discriminated against in terms of international and UK markets?

[Lord Newby]

My Lords, as noble Lords will be aware, at the G20 last year the Prime Minister had this issue at the top of the agenda, since when the OECD has produced a whole raft of measures aimed at ensuring that companies pay their fair share of tax. Noble Lords will have seen the end of what was called the “double Irish” tax avoidance scheme in Ireland, and there are currently European Commission probes against tax avoidance in the Netherlands and Luxembourg. There has been a real tightening-up in this area, which was reinforced at the recent G20 summit.

Taxation: Tax Collection

Debate between Lord Teverson and Lord Newby

Thursday 4th July 2013 Lords Chamber

[Lord Teverson]

To ask Her Majesty’s Government what action they intend to take to increase the collection of tax revenue following Apple’s zero return for United Kingdom corporation tax.

[Lord Newby]

My Lords, I am unable to comment on the tax affairs of individual companies, as doing so would be a breach of taxpayer confidentiality. Tax avoidance by multinational enterprises is an issue that requires co-ordinated global action. The UK is committed to supporting multilateral action through the G20 and the OECD. The OECD will present an action plan for tackling these issues to the G20 later this month.

--- Later in debate ---

[Lord Teverson]

My Lords, I thank my noble friend the Minister for that reply. What conversations are the Government having with the Republic of Ireland to prevent footloose and stateless subsidiaries paying derisory levels of corporation tax in its domain? I come back to my fundamental question. Is it right that my wife’s small printing business last year paid its full dues of £22,000 of corporation tax, when Apple, with a turnover in the UK of £1 billion, paid absolutely nothing?

[Lord Newby]

My Lords, the noble Lord raises an important point. Eighty-four per cent of Apple’s non-US operating income was booked by an Irish subsidiary that was not tax-resident anywhere and paid tax at a rate of 0.05%. That is clearly unacceptable and is why the G20 will look at the issue later this month. It will be presented with a report from the OECD that suggests not only what action is needed but sets deadlines for taking it and makes proposals on the resources that are going to be needed to implement the new rules.

Financial Services Bill

Debate between Lord Teverson and Lord Newby

Monday 15th October 2012 Lords Chamber

[Lord Newby]

My Lords, this amendment seeks to remove the possibility of any element of cross-subsidy between different classes of authorised firms. We do not feel that it is either necessary or helpful. We do not consider that the practice of allowing some cross-subsidies between classes is inherently wrong, and nor should it be prohibited in every case. Not only does the potential for cross-subsidy help ensure a sustainable scheme with lower levy thresholds, but it helps to ensure that the compensation supports consumer confidence in the financial services sector as a whole, by limiting the risk that compensation claims cannot be met. If the scheme has insufficient funds to pay out claims to policyholders of a failed insurer, bank customers are unlikely to have confidence that the scheme will be able to pay out if their bank fails.

As I have already stated, the decision on how the FSCS is funded is best made by the regulators and implemented through their rules. In particular, it is the regulators who understand what is appropriate and affordable by different classes of firms and so are best placed to determine when, or indeed if, cross-subsidisation is appropriate. I equally accept, however, that there is a need for proportionality in the different classes of firms that are expected to contribute. I am well aware, for example, that in the past the building society sector has felt that it has had to pay a disproportionate burden.

However, as I have mentioned, the FSA is consulting on how the FSCS will be funded, although in broad terms, as the noble Lord, Lord Teverson, said, both the PRA and the FCA will have rule-making responsibility for the scheme. The PRA will make rules for deposit takers and insurance providers and the FCA will make compensation rules for all other types of financial activity covered by the scheme.

The best way to deal with the specific issue raised by my noble friend is via the FSA’s consultation on the draft scheme, which I mentioned earlier. It is ongoing—it has several weeks left to go—and it is the best way now of ensuring that the scheme we end up with is the best possible scheme for all the different classes of firms which will be covered by it. On that basis, I ask my noble friend to withdraw his amendment.

[Lord Teverson]

My Lords, I thank the Minister for his reply. Obviously I am somewhat disappointed. Clearly the consultation is an area in which the sector and I will participate but there is a real issue around justice and equity in this sector and how the scheme will work. I shall perhaps take the opportunity to speak to him further between now and Report, but, in the mean time, I beg leave to withdraw the amendment.