Tax Avoidance, Evasion and Compliance

Margaret Hodge Excerpts

Monday 4th March 2019 Commons Chamber

[Dame Margaret Hodge (Barking) (Lab)]

I know that this Government find it difficult to listen to anybody and to accept the will of Parliament and legislation if they do not like what it says—they have form—but I want to ask the Minister two questions, one relating to the overseas territories and one relating to the Crown dependencies. On the overseas territories, it is utterly shameful for this Government to ignore legislation that was enacted only last year and to invent their own date for the implementation of public registers of beneficial ownership. If the Government are serious about wanting to tackle tax avoidance, tax evasion, financial crime and money laundering, they ought to be acting with greater speed, not delaying the implementation of legislation and ignoring the will of Parliament. Will the Minister explain to us what on earth the Government are doing?

On the Crown dependencies, I cannot for the life of me understand how the Minister can pray in aid the constitutional implications of this House legislating on a matter that was perfectly in scope in relation to the Bill that the House is considering and perfectly in order on the matters it was attempting to address. Such praying in aid of inadequate and ill-thought-through reasons simply will not do. Indeed, I cannot understand why the Minister does not recognise the consensus across this House on the issue. Transparency is a vital tool in fighting tax avoidance, evasion and financial crime, and all we want is that transparency to exist across the family. Would it not be better for the Minister to concede gracefully to the will of Parliament, rather than battling limply to a defeat in the future?

[Mel Stride]

I assure the right hon. Lady that I always listen extremely carefully to what she has to say, as I have done in the context of her current two questions. She asked why we are delaying—as she terms it—the implementation of public registers of beneficial interest for overseas territories. The short answer is that it is important that we allow time to ensure that we get these things right, not least because our Parliament is legislating on behalf of another jurisdiction—albeit one that is closely related to ourselves. It is important that we are considered and measured in that way.

The right hon. Lady’s second question relates to the Crown dependencies. She made the quite legitimate point that the amendment to the legislation that was due to go through this afternoon was indeed in scope and in order. However, that is not the same as saying that that contradicts my earlier point that that particular amendment would have considerable and significant constitutional ramifications for our Crown dependencies. For that reason, as I stated earlier, the Government feel that it is important to reflect carefully upon that before we come back with the legislation in due course

Finance (No. 2) Bill

Margaret Hodge Excerpts

2nd reading: House of Commons
Monday 11th December 2017 Commons Chamber

[Mel Stride]

As my hon. Friend will know, we brought in a variety of measures in 2015 that changed the basis of taxation for banks. Over the period of the coming forecast, we will be receiving some £4.5 billion in additional income from banks by way of taxation as a consequence of those changes.

From April 2018, new diesel cars will go up one vehicle excise duty band in their first-year rate, and the existing company car tax diesel supplement will increase by one percentage point. However, drivers of petrol and ultra low emissions vehicles—cars, vans and heavy goods vehicles—will not be affected, and nor will those who have already bought a diesel car. As the Chancellor said at the Budget, white van man and white van woman can rest easy.

[Dame Margaret Hodge (Barking) (Lab)]

White van man and white van woman will rest easier if the Government successfully bring in all moneys due. Will the Minister explain why he has limited the scope of the Finance Bill in such a way that amendments cannot be tabled to ensure that we have a date by which measures such as country-by-country reporting, which is crucial to bringing in tax that is otherwise avoided, should be introduced?

[Mel Stride]

I think that the right hon. Lady is referring to an amendment of the law resolution. The previous Finance Bill was introduced under exactly the same Ways and Means procedure. There is nothing in the resolutions that prohibits full, open and proper discussion and scrutiny of the Bill. It will go through all its usual stages, including two full days in Committee of the whole House, and eight sittings—if it takes that amount of time—upstairs in Committee, before coming back to the Chamber for Third Reading.

Since the financial crisis, UK productivity growth has slowed. It now stands at just 0.1%. The Government know that restoring strong productivity growth is the only sustainable way to increase wages and improve living standards in the long term. Consequently, a quarter of a trillion pounds of public and private investment has been funnelled into major infrastructure projects since 2010, including the biggest rail modernisation programme since Victorian times, the Mersey Gateway bridge and, more recently, Crossrail. Many others are detailed in the Infrastructure and Projects Authority’s national infrastructure pipeline. The Government have also cut taxes to support business investment and improved access to finance through the British Business Bank. However, we can and will go further.

To boost productivity and create sustainable economic growth, the Government are making further provisions to support the UK’s dynamic, risk-taking businesses. The UK continues to be a world-leading place to start a business, with 650,000 start-ups in 2016 alone. However, some of the UK’s most innovative new businesses with the greatest potential are struggling to scale up due to lack of finance. Specifically, 10 of the UK’s largest 100 listed firms were created after 1975, compared with 19 in the United States of America. In order properly to understand these barriers to finance, the Treasury commissioned the patient capital review, led by Sir Damon Buffini. Supported by Sir Damon’s industry panel, the review concluded that knowledge-intensive companies, which are particularly research and development-intensive, often require considerable up-front capital to fund growth. It may be many years before their products can be brought to market and, despite their growth potential, such companies often face acute funding gaps.

In response to the review’s findings, the Government are acting. We are setting out a £20 billion action plan, combining investment with tax incentives. As part of the plan, the Bill will make more investment available to high-risk, innovative businesses. It does so by doubling the annual limits for how much investment knowledge-intensive companies can receive through the enterprise investment scheme and venture capital trusts schemes to £10 million, and doubling the limit on how much investors can invest through the EIS to £2 million, providing that anything above £1 million is invested in knowledge-intensive companies. In 2016-17, 62% of investment by EIS funds was aimed at capital preservation, rather than higher-risk, higher-potential, long-term growth companies. The Bill therefore reforms the schemes, redirecting low-risk investment into growing entrepreneurial companies, while changing venture capital trust rules to encourage higher-growth investments. In all, we expect these changes to result in over £7 billion of new and redirected investment in growing companies over the next 10 years.

Additional efforts to boost productivity also focus on increasing funding for research and development. At the 2016 autumn statement, £4.7 billion was allocated to R and D, and this Budget extended the national productivity investment fund to £31 billion and increased R and D investment by a further £2.3 billion. This means that the Government will be investing an additional £7 billion in R and D over the next four years—the largest increase in four decades.

We have already announced initial plans for this investment, including £170 million to help the construction industry to build cheaper and better homes; £210 million to develop new technologies that enable the early diagnosis of chronic diseases; a commitment to supporting the development of immersive technologies and artificial intelligence; and more than £300 million to develop and attract the skills and talent necessary to deliver our scientific ambitions. These efforts are complemented by our decision to increase the rate of R and D expenditure credit from 11% to 12%, as set out in the Bill.

The Bill will ensure that the tax system is fair, balanced and sustainable. To that end, it freezes the indexation allowance that currently allows companies but not individuals to reduce their taxable gains in line with inflation. It allows Scottish police and fire services to recover future VAT payments, which would otherwise be lost following the Scottish Government’s decision to restructure those services. I should pay tribute to my Scottish colleagues on the Government side of the House who lobbied so effectively in that respect.

The Bill narrows the scope of the bank levy so that, from 2021, all banks—UK and foreign-headquartered—will be taxed only on their UK operations.

Public Country-by-country Reporting

Margaret Hodge Excerpts

Wednesday 22nd November 2017 Westminster Hall

[Dame Margaret Hodge (Barking) (Lab)]

It is a pleasure to speak before you this afternoon, Mrs Main. I join others in congratulating the hon. Member for Amber Valley (Nigel Mills) on securing this debate. I also congratulate my right hon. Friend the Member for Don Valley (Caroline Flint) on actually getting this practice on to the statute book in 2016.

I will just add, very briefly, to what has been said so far. It is great that there is consensus this afternoon across the parties, and that kind of consensus is what I have encountered in many of the discussions that I have had on these issues. I hope that the Government will listen and act on that consensus in a way that would win support among the vast majority of Members of this House and outside this House. My only quarrel with the hon. Member for Amber Valley is that I do not think that would be taking unilateral action; I think we would be showing bold leadership if we were the first to act in this area.

I want to make three brief points. First, one issue arising from the Paradise papers that has not been raised, and for which country-by-country reporting would be an important part of the answer, is that corporations and companies were revealed to be seeking locations for their business in a way that would create artificial financial structures that existed simply for the purpose of avoiding tax. Apple received some coverage in the papers, but it is utterly awful that all Apple’s activity outside the USA is now housed, I think, in Jersey and is worth, according to what we can uncover, £252 billion. It is very difficult to find what Apple’s rate of tax is, but one of its companies—according to the European Union, I think; no doubt my hon. Friend the Member for Oxford East (Anneliese Dodds) will make this clear from the Front Bench—ended up paying a rate of tax of 0.005% on its earnings here.

It is clear from the Paradise papers that Apple sought to find a financial structure that would allow it to avoid paying tax in those jurisdictions outside America where it carried out its economic activity and secured its profits. One of the purposes of transparency in country-by-country reporting would be to see where Apple was undertaking its economic activity and therefore where it should be taxed. Over half of Apple’s business is outside the USA; it is simply not getting taxed in the places that it should be.

The other company is Nike. Anyone who buys a pair of Nike trainers in any UK shop would think that the tax was paid here, but it is not. It used to go to Holland and it then ended up, in a complicated way, in Bermuda. Since then, a new structure has been invented: Nike Innovate C.V. It is a virtual entity; it does not have a location. It is not based anywhere. That structure enables Nike to avoid paying the tax that it should in the jurisdictions where it carries out its business and makes its profits. The big corporations would not be able to carry out their business in the way they currently do, as revealed most recently through the Paradise papers, if we had transparent, open, public country-by-country reporting.

The second thing I want to talk about is collecting money from tax avoidance. I hope the Minister will give us a bit of information in his response, as I am rather tired of hearing from the Prime Minister, the Chancellor and the Minister about how brilliantly this Government are doing at collecting that money.

[The Financial Secretary to the Treasury (Mel Stride)]

indicated assent.

[Dame Margaret Hodge]

The Minister is nodding his head, but the Government should be honest with us. The figure of £160 billion that is currently used—I have heard it used time and time again—is simply an HMRC estimate of the money due from tax avoidance that it has uncovered. It does not tell us how much has been collected or how much has been added to the coffers.

Since the Minister used the figure in a debate last week, I have tried to identify how much we have actually got in. I have asked everybody. I have asked the National Audit Office and the Library. I have tabled questions to the Minister, to which he has yet to reply—perhaps he will reply this afternoon. No one actually tells one how much has been collected in tax avoidance. My guess is that it is a tiny, minute amount of that £160 billion that the Government claim they have got in. Please be honest with us. A little bit of honesty will enable us to have a proper debate.

The final point I want to make, adding to what others have said, is that if the Minister showed the bold leadership we want him to show by having public registers of beneficial ownership, he would be incredibly popular. I would have thought that there could not be a better time than now for Conservative Members to try to gain some popularity. I will give three examples of what has happened recently. After the release of the Paradise papers, the Tax Justice Network launched a petition that gained more than 200,000 signatures. It has now presented that petition to Downing Street. Oxfam did some polling that showed that eight out of 10 members of the public think that multinationals with UK headquarters should publish information publicly about the size of their profits, where they are made, what taxes are paid and the countries in which they operate. Some 70% of Conservative voters believe that the Government should be more active in tackling tax avoidance by companies. Some 80% of Conservative voters are in favour of tougher transparency rules for companies.

The final survey I wanted to refer to was of the FTSE 100. Four out of every five of the top 100 FTSE companies would not oppose the introduction of a legal requirement to make their country-by-country reports public. In fact, a large number would support it. The hon. Member for Amber Valley eloquently made the point that the reporting requirements in other legislation to date are pretty open. Why not put this requirement into the mix? It is supported by the analysis.

This is the fourth debate on these issues in the past month that I have participated in, and I will carry on holding such debates time and time again. I am sorry if the Minister feels it is not the best use of his time, but we will carry on doing this. This is a campaign we are absolutely determined to win, and part of that campaign is public country-by-country reporting.

[Mrs Anne Main (in the Chair)]

I remind Members that I will call the Front-Bench spokesman for the Scottish National party at 5.10 pm.

--- Later in debate ---

[The Financial Secretary to the Treasury (Mel Stride)]

It is a pleasure to serve under your chairmanship, Mrs Main, and I thank my hon. Friend the Member for Amber Valley (Nigel Mills) for having secured what I think we all accept is an extremely important debate. I also thank him for the advice he has been able to give me over the months and years on matters as exciting as corporate taxation.

I also welcome my hon. Friend’s support for some of the measures in today’s Budget—this is not an area of Government policy that we are going to be neglecting anytime soon; we are going to be all over this space in a very significant manner. He specifically raised measures relating to VAT and the collection of VAT from those who use digital platforms. We are indeed introducing joint and several liability to make sure that we step up the clampdown on, in that instance, VAT fraud.

The right hon. Member for Barking (Dame Margaret Hodge) suggested that our figures were not durable and questioned the veracity of our numbers. We have secured £160 billion through clamping down on tax evasion and non-compliance, and that figure appears in HMRC’s annual report and accounts, which are of course audited by the National Audit Office.

[Dame Margaret Hodge]

That is not secured money; it is money to which HMRC feels it is entitled but has yet to secure. My experience from the Falciani Swiss leak suggests that intentions do not become reality.

[Mel Stride]

I do not think the right hon. Lady and I are going to agree on that particular point. One point we might agree on is the tax gap, which is 6%—the lowest in our history. That is the difference between that which we should be collecting and that which we are collecting. It is a world-beating figure, also audited by the NAO. According to the International Monetary Fund, it sets a world standard in terms of robustness.

As you will know, Mrs Main, we have done a great deal over the years in clamping down on tax avoidance and evasion. In the Finance (No. 2) Act 2017, which has just gone through Parliament, we introduced corporate interest restrictions to stop companies shifting profits around by the ingenious use of intra-company loans. We had the diverted profits tax in 2015, which addresses a number of the examples we heard in the debate today. We have been in the vanguard of the base erosion and profit shifting project at the OECD. We are benefiting now from the common reporting standards across 50 countries—rising to 100—so account information is available to HMRC in real time. We are engaged with the EU on mandatory disclosure rules to make sure that we can clamp down on schemes, through those who are party to them.

The right hon. Member for Don Valley (Caroline Flint) raised the issue of the information required from the extraction sector and the financial sector in comparison with the ask on country-by-country reporting. Those are of course different sets of information. In the case of the extraction sector and the financial sector, the information required is significantly less exhaustive than would be the case in country-by-country reporting.

The right hon. Lady also asked a very important and pertinent question about how many countries would need to say yes for us to feel that we could go ahead on a multilateral basis. I suppose that gives rise to other questions, such as which countries and what mix of countries. She can rest assured that as and when, as we hope, we reach the point when sufficient countries say they will sign up, we will be pleased to do so. I add my congratulations to her for the hard work that she did, particularly on the Finance Act 2016, to ensure that her amendment reached the statute book.

My hon. Friend the Member for Ochil and South Perthshire (Luke Graham) spoke about the importance of international standards. He also raised the issue of intangible assets, which is one of the common threads running through the issues of companies shifting profits around. If there is clearly economic activity in a particular place, it is much easier to pin the profits to where that activity is occurring than if there are, for example, digital companies that are selling substantially into the United Kingdom but basing their operations elsewhere. That can be through royalty payments on intellectual property charges between companies; it is quite possible to avoid tax as a consequence. That is why we announced in the Budget today that we will be looking at introducing the withholding of taxes in respect of royalty payments for IP, where they relate to movements of income between ourselves and very low-tax jurisdictions. We will be looking into that whole area by way of consultation.

I was tickled by the suggestion from the right hon. Member for Barking that she could feed me ideas that would make me more popular within my own party. I look forward to hearing as many of those as she cares to pass my way, because I am very interested in being so popular.

The hon. Member for Ealing Central and Acton (Dr Huq) raised the issue of registers of beneficial ownership across, particularly, Crown dependencies and overseas territories. We have those; they are not public, but they are accessible in real time by HMRC and we have a good record in tracking down people who try to stash money away in, for example, overseas trusts. We have raised £2.8 billion in that respect since 2010. I was pleased that the hon. Lady welcomed the measures in today’s Budget that extend to 12 years the time period in which we can go after individuals who have been involved in just that kind of activity.

In my final couple of minutes, I want to focus on the principal arguments. We are not against country-by-country reporting. We welcome the opportunity to move to exactly that situation, but to do so unilaterally will not work, for at least three reasons. It would certainly make the UK less competitive than other tax jurisdictions. I see no reason why any particular business should want to go to a country with that in place as strongly as they would want to go where it is not in place. If it were just us alone, we would also be in the position of not being able to get public disclosure if a UK company had associated non-UK companies in other jurisdictions and not under that company’s control. The big advantage of going multilaterally is the standardisation of the standards that we set and the rules and regulations around each particular step.

The Government will continue to work towards bringing in not just country-by-country reporting as we have at the moment, but public country-by-country reporting. I am grateful to my hon. Friend the Member for Amber Valley and all those who have contributed to the debate for helping to inform that discussion.

Tax Avoidance and Evasion

Margaret Hodge Excerpts

Tuesday 14th November 2017 Commons Chamber

[Dame Margaret Hodge (Barking) (Lab)]

I beg to move,

That this House has considered the systemic issues enabling tax avoidance and evasion uncovered by the Paradise Papers.

The actions and the culture of powerful large corporations and of the wealthiest in our society, as revealed in the Paradise papers, constitute a national and international disgrace. What we have learned is that tax avoidance is not just a trivial irritant practised by a small number of greedy individuals and global corporations; it is the widely accepted behaviour of too many of those who are rich and influential. It is clearly taking place on an industrial scale and it has become a scourge on our society. The Paradise papers reveal the enormity and scale of the problem and that is what makes this emergency debate on the issue so important.

Our debate is also urgent and timely because the Chancellor, who sadly is not in his place to hear the debate, is putting the finishing touches to his Budget. I hope that he will read very carefully the views expressed today by Members and reflect them in the proposals he brings to us next week.

[Jack Dromey (Birmingham, Erdington) (Lab)]

There is no such thing as a magic money tree: that is what the Prime Minister told a nurse who had not had an increase in eight years. Does my right hon. Friend agree that there is, and that they grow on the Cayman Islands, in Bermuda and Jersey; and that were the ill-gotten gains salted away by tax dodging to be picked and put into our public services, police officers and teachers would not be facing the sack and we would not be facing a crisis in the health service?

[Dame Margaret Hodge]

I completely agree with my hon. Friend’s remarks, which are very pertinent to what we will be discussing in the debate.

Paying tax is an essential part of the social contract into which we all enter as members of a community. As members of society, we agree to abide by a set of rules and regulations that make all our lives better. One of those rules is that we agree to contribute through taxation into the common pot for the common good.

[David Morris (Morecambe and Lunesdale) (Con)]

I would like to ask the right hon. Lady why her family firm, Stemcor, is famous for paying virtually no tax.

[Dame Margaret Hodge]

I am really pleased the hon. Gentleman has given me the opportunity to explain the circumstances to the House. My father and his cousins were refugees from Germany. My father was then a refugee from Egypt, so he was a double refugee. I remember as a child that he often said to me, “You will never feel safe in this country. Always have your suitcase ready.” He did keep money abroad. When we discovered that after he died, we closed those funds and put them into a charity.

The level of taxation and who pays is decided by us here in Parliament through our democratic processes. That is how we create a system that is democratic and trusted by all. When a minority choose to ignore and deliberately bypass our rules and regulations and get away with it, they undermine confidence in the fairness of the system. Some people and some Members claim that tax avoidance is okay because it is lawful. Indeed, one of the Government’s Ministers from the other place, the noble Lord Bates, said on Monday that tax avoidance

“continues to be part of the international system and we recognise and value it.”—[Official Report, House of Lords, 13 November 2017; Vol. 785, c. 1611.]

He and others are simply wrong, and they misunderstand the issues. Her Majesty’s Revenue and Customs’ own definition of tax avoidance is clear:

“Tax avoidance involves bending the rules of the tax system to gain a tax advantage that Parliament never intended. It often involves operating within the letter, but not the spirit of the law.”

Those are the words of HMRC. Even it says that tax avoidance is wrong.

[Hannah Bardell (Livingston) (SNP)]

Does the right hon. Lady agree that a feature of a strong tax system is having a proper network of HMRC offices, and that centralisation and the closure of offices such as the one in my constituency is a disgrace that will do nothing to help the situation?

[Dame Margaret Hodge]

I agree with the hon. Lady that resourcing HMRC is absolutely central to the fight against tax avoidance and evasion.

Tax avoidance is completely different from tax planning, whereby, for example, Parliament intended to encourage people to save for their pension by introducing ISAs with tax breaks. Tax avoiders, on the other hand, thwart the intention of Parliament. Their action means our collective will is ignored. We should not tolerate it and we must act urgently to eradicate it.

[Ms Angela Eagle (Wallasey) (Lab)]

Does my right hon. Friend agree that one of the best ways of trying to deal with this increasingly serious issue is to have openness and transparency in all funds held offshore, so that those who are doing this have to face the legitimate scrutiny of taxpayers in this country?

[Dame Margaret Hodge]

My hon. Friend makes an absolutely central point to what we will be asking for today.

Not only does the behaviour of a few damage trust in the system as a whole, but it damages the public services our taxes are used to fund. At a time when the NHS is under such pressure, when public sector workers have had their wages held down for years and our schools are struggling to deliver the best start for all our children, for the super-rich and the powerful to think that they can opt out of their duty to contribute fairly through paying taxes is completely and utterly and totally immoral and wrong, and it is our responsibility to put an end to it.

[Anna Soubry (Broxtowe) (Con)]

I have been very helpfully provided with some facts that I think should be put to the House. I am told that since 2010 the Government have secured £160 billion from tackling avoidance, evasion and non-compliance and £2.8 billion from offshore tax evaders, and invested £1.8 billion in Her Majesty’s Revenue and Customs to tackle avoidance and evasion. I am very proud of this record. Does the right hon. Lady agree that it is an excellent record from a Conservative Government? How does it compare with the record of the Labour Government that she has always been so keen to support?

--- Later in debate ---

[Dame Margaret Hodge]

I hope that the right hon. Lady will listen to the whole of my speech. I think she will acknowledge, as we move forward, that a little progress has been made but not enough. I agree that the previous Labour Government’s record on tackling tax avoidance was not as good as I would have wanted, but the record and actions of this Government are inadequate and somewhat hypocritical. Their rhetoric is mostly fine, but the reality is badly wanting.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

When ordinary people hear the Budget next week and have to think about their taxes against the background of inflation in food prices, will they not wonder why the Members opposite are hellbent on avoiding any inquiry into aggressive tax avoidance?

[Dame Margaret Hodge]

I agree entirely with my hon. Friend. Indeed, I was about to say that those who pay their taxes are completely fed up. By 8 o’clock this morning, nearly 156,000 people had signed a petition going to the Prime Minister. This is an issue that angers people across the country, men and women, supporters of all political parties, people of all ages and people in every income group.

[Rebecca Pow (Taunton Deane) (Con)]

Obviously the right hon. Lady is making a very good point—everybody wants tax evasion clamped down on—but I, too, have some statistics. The Government have invested £1.8 billion in HMRC to tackle tax avoidance and reduced the tax gap by 2% more than Labour did. We are on the right track.

[Dame Margaret Hodge]

If the hon. Lady looks at the HMRC figure on the tax gap, which is about £34 billion to £36 billion, and then at the figure that tax campaigners talk about, which is a gap of £120 billion, I think she will share my determination to see much more action to deal with this ill in our society.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

I congratulate my right hon. Friend on securing this debate. Does she share my concern about the complacency being shown today? Cutting down on global tax abuse clearly requires international co-operation. As we exit the EU, does she share my concern that this ambition not be damaged by our exit but be strengthened by our actions domestically and internationally?

[Dame Margaret Hodge]

I completely concur with my hon. Friend’s important remarks.

It is our job, as the elected representatives of those who are angry, to do what we can to put a stop to tax injustice. Tax avoidance should be not an issue that divides us, but one on which we work together in the interests of all taxpayers and in order to protect our public services. The Paradise papers are the latest in a series of leaks unmasked by the international press. I salute the professional investigatory journalists involved in making sense of the millions of documents passed to them, especially those at The Guardian and on “Panorama”, who have been working on the papers for a year, and I salute the public-spirited courage of the whistleblower who first passed the papers to the German newspaper, the Süddeutsche Zeitung. The Paradise papers contain 13.4 million files from just two offshore providers of tax advice and the company registries of 19 tax havens. The scale of the data is what makes the leaks so important.

We have had the Panama papers, the Luxembourg leaks, the Falciani leaks, the so-called Russian and Azerbaijani laundromat revelations on money laundering, and now we have the Paradise papers. We will continue to see new leaks splashed over our papers and filling our television screens until the Government act firmly to clamp down on the avoidance that is so blatant and yet so wrong.

[Helen Whately (Faversham and Mid Kent) (Con)]

The right hon. Lady has said several things I agree with—for instance, that everybody should pay their fair share into the tax system, which helps fund our vital public services, and that everyone should work together on tax avoidance—but, given that, does she not feel ashamed at her party’s actions to block steps, before the election, that would have reduced tax avoidance?

[Dame Margaret Hodge]

I am trying not to make this overly partisan, but I feel more ashamed, as a Member of Parliament, at the hon. Lady’s party’s reluctance to adopt the clear and simple measures that could really tackle tax avoidance.

[Several hon. Members rose—]

[Dame Margaret Hodge]

I want to make some progress, because a lot of people want to speak in what is a two-hour debate.

Last week, our papers were filled with scams and scandals concerning celebrities, from the self-appointed philanthropist Bono to the popular actors in “Mrs Brown’s Boys”: stories that tainted the reputation of our much-loved royal family; revelations about establishment figures in politics, such as Lord Ashcroft and Lord Sassoon; and further evidence that corporations such as Apple deliberately establish artificial financial structures that have no other purpose than to avoid tax. I want to focus, however, on the systemic issues that these stories illustrate. It is the systemic issues that we need to consider if we are to make progress.

I will start with two comments arising from what we have learnt from the Paradise papers—observations that help us to understand what is wrong with our system. Appleby, the firm of lawyers at the heart of the Paradise papers, is one of the few offshore law practices that belong to the “offshore magic circle” of service providers. Indeed, Appleby was named offshore firm of the year by “The Legal 500” in 2015. Yet the Paradise papers reveal that the firm was criticised no less than 12 times over a 10-year period in reports issued by regulators in UK tax havens: the British Virgin Islands, the Isle of Man, the Cayman Islands and Bermuda.

Appleby was criticised for its failure to comply with regulations designed to stop the funding of terrorism and prevent money laundering. The reports talked of “persistent failures and deficiencies”, “severe shortcomings” and

“a highly significant weakness in the adequacy of the organisation’s systems and controls and a deficiency in meeting its regulatory requirements.”

Further documents reveal that Appleby simply ignored these critical reports and failed to change its procedures, despite strong words from the regulatory bodies. Even the authorities on the British Virgin Islands found, after an inspection of Appleby, that the firm had

“contravened financial services legislation…the anti-money-laundering code of practice 2008 and the anti-money-laundering regulations 2008”

and had

“severe shortcomings with a majority of the legislation, with prudential standards and good practice requirements not being met.”

Our regulatory frameworks are so weak that law firms can ignore or break the law with complete impunity. It is hopeless having self-regulation, national and international codes of practice and regulatory bodies with legal powers, if in practice they fail to secure compliance and good behaviour. The lawyers clearly just did not give a damn, and nobody held them to account.

[James Duddridge (Rochford and Southend East) (Con)]

The title of this debate is “Tax Avoidance and Evasion”. I thought I understood the distinction between the two, but I feel the line is being blurred. How does the right hon. Lady understand the distinction between avoidance and evasion?

[Dame Margaret Hodge]

I agree that the line is extremely blurred. Schemes put forward as legitimate tax avoidance are frequently found to be unlawful when HMRC finally catches up with them. It is difficult to make distinctions.

Worse than that, Appleby helped to co-ordinate a well-funded and comprehensive lobby by the International Financial Centres Forum before a G8 summit that David Cameron chaired in 2013. The then Prime Minister had intended to insist that the UK’s tax havens publish public registers of beneficial ownership in their jurisdiction. Had David Cameron had his way, we might not be here today, but the IFCF lobbied fiercely to maintain secrecy. It lobbied the right hon. Member for South West Hertfordshire (Mr Gauke), the then Exchequer Secretary, it lobbied the permanent secretary at the Department for Business, Innovation and Skills, it lobbied the senior official who was then director of the UK’s G8 presidency unit, and it succeeded in weakening David Cameron’s commitment to transparency.

[Mike Gapes (Ilford South) (Lab/Co-op)]

I thank my right hon. Friend and neighbour for giving way. Is not the fact that the vast majority of these tax havens are British overseas territories the key question, and is it not time that this Government—or any other Government in the country—took seriously the fact that those places are not doing what is in the interests of British people all over the world?

[Dame Margaret Hodge]

It is also not in the interests of the many developing countries that lose more tax through tax avoidance than we do in proportion to their budgets.

[Robert Jenrick (Newark) (Con)]

The right hon. Lady’s central contention is that those territories should publish open registers of beneficial ownership. First, does she acknowledge that the United Kingdom is now one of the only countries in the world to do so, as a result of action by this Government? That was a huge achievement on the UK’s part. Secondly, in an international context, virtually no other major developed country in the world has done it. The state of Delaware, in which 90% of US corporations are registered—

[Mr Speaker]

Order! When I say “order”, the hon. Gentleman must resume his seat. I do not wish to be unkind to him. He is always very fluent, but he usually takes too long, and that was not just too long; it was far too long.

[Dame Margaret Hodge]

I simply observe that the UK also has responsibility for the overseas territories and Crown dependencies, and I wish that its own tax code did not contain so many harmful elements that encourage tax avoidance.

Appleby’s lobbying illustrates another continuing problem. The Treasury, and other Ministers and Departments, listen only to a very small and exclusive group of tax professionals when making decisions on tax policy. It is one thing for the Government to consult stakeholders on issues, but it is quite another for the Government to be captured by the tax industry at the expense of the wider public interest. Tough and active regulation of the industry to ensure compliance with existing rules is therefore vital. Curtailing the influence of tax professionals on tax policy is essential, and making the advisers accountable for the schemes that they invent and market is central to the campaign to destroy tax avoidance.

The measures in the Finance Act 2017 represent one small step in the right direction of holding advisers to account, but the small print suggests that very few, if any, will be caught by the legislation. The definitions are too narrow, and the penalties too weak. Those measures have been introduced so that the Government can claim that they are acting, but until advisers are really called to account and properly punished for inventing schemes that are purely aimed at avoiding tax, the army of lawyers, accountants and bankers will continue to prosper. If the Government are serious about tackling tax avoidance, they must act strongly to deal with the illegitimate practices of those who make a huge living from peddling tax avoidance advice.

[Ian C. Lucas (Wrexham) (Lab)]

My right hon. Friend is making a powerful case. Does she agree that the approach of the prosecuting authorities in this country must also be improved? It is striking how seldom they proceed with the legislation that we introduce.

[Dame Margaret Hodge]

I entirely agree. I must now make progress, because otherwise I shall take up too much time.

More than half of the Appleby offices are located in British tax havens. More than half of the entities that were exposed in the Panama papers were incorporated in just one UK tax haven, the British Virgin Islands. Estimates of the wealth held in tax havens are by their nature difficult to verify, but they vary from $7.6 trillion to $32 trillion.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

Will my hon. Friend give way?

[Dame Margaret Hodge]

I will, for the last time.

[Rushanara Ali]

Does my right hon. Friend agree, in the light of what she has said, that Britain has a unique leadership role? Developing countries lose income amounting to between $100 billion and $160 billion a year. Imagine what we could do to tackle poverty if that money were available.

[Dame Margaret Hodge]

I completely agree with my hon. Friend’s very powerful point.

Unbelievably huge sums of money are hidden in these jurisdictions. It is impossible to measure accurately how much tax is lost through the presence of tax havens, but it runs into hundreds of millions of pounds every year. We do know that developing countries lose three times as much in tax avoidance as they gain from the global investment in international aid. Our tax havens, acting as secret, low or no-tax jurisdictions, are utterly central to much of the tax avoidance. We cannot continue to pretend that we are leading the international fight against tax avoidance and evasion when, by what we do and what we fail to do, we allow avoidance to prosper; and not just tax avoidance, but money-laundering, corruption, bribery and other financial crimes, which prosper through the secrecy that we allow to prevail. Our failure to tackle our tax havens, our weak regulatory regime and some of our tax rules means that we are now seen as the country of choice for kleptocrats and criminals as well as tax avoiders and evaders, as they seek to hide their money and minimise their tax bills.

We need our Government to hold to the commitments made by the Prime Minister and the Chancellor in 2013 and 2014. They understood that transparency was the key ask. We need public registers of beneficial ownership, showing who owns what and where. That, at a stroke, would undermine so much. Would Bono have invested in tax havens if he had thought that we would all know? Would Lewis Hamilton have created a complex structure of companies to avoid VAT? Would the actors in “Mrs Brown’s Boys” have hidden their earnings in artificial financial structures if they had thought that we would find out? The answer is no.

David Cameron understood that when he told the UK tax havens to rip aside “the cloak of secrecy” in 2013, when he urged them in 2014 to consult on a public register that was

“vital to meeting the urgent challenges of illicit finance and tax evasion”,

and when he proclaimed in 2015 that

“if we want to break the business model of stealing money and hiding it in places where it can’t be seen: transparency is the answer.”

However, in the last two years the Government have fundamentally watered down that commitment to public registers in British tax havens, and now we hear Ministers say that we must wait for other countries to go first. The proper call for international action on transparency has become the lame excuse for inaction in our own territories.

We should lead by example. We should demonstrate that transparency can and does change behaviour. We should compel our overseas territories and Crown dependencies to publish public registers. In the past, a Conservative Government used their powers to outlaw capital punishment in our Crown dependencies and overseas territories, and a Labour Government used the same powers to outlaw discrimination against gay people. Today we should work together to outlaw the secrecy of those jurisdictions, which leads to such massive tax injustices.

The Paradise papers show us that the problems created by secrecy are much bigger and more complex than we ever thought possible, and that is why we need to legislate for transparency in our tax havens. We should help them to transform their economies, so that they stop depending on hidden wealth, unsavoury people, and questionable financial practices. I cannot think of one good reason for us not to do that, and to do it now. Indeed, there is more that we can do, right now: it simply requires the Government to have the necessary political will. They will certainly have the support of the whole House, and the whole country, if they demonstrate by their actions, not their words, that they will work to stamp out tax avoidance.

We can and should now implement the legislation requiring multinational companies to report their activity and profits on a country-by-country basis—legislation successfully steered through Parliament by my right hon. Friend the Member for Don Valley (Caroline Flint). We can and should also introduce immediately the public register of property ownership that was enacted before the general election, promoted by Transparency International and Global Witness and supported by members of the all-party group on anti-corruption. Nobody knows why this legislation has not been implemented; it is a key element in the fight against corruption, avoidance and evasion. We can and should properly resource HMRC now so that it has the capability to pursue all who seek to avoid paying tax, not just the small businesses who form an easy target that can be hounded with little effort. Every £1 invested in HMRC enforcement yields £97 in additional tax revenues. It is a complete no-brainer that we should be strengthening HMRC and reversing some of the cuts.

The Paradise papers have helped place tax avoidance back at the heart of the political agenda and back at the top of the list of public concerns. The Government need to grasp this moment to act. They have an opportunity to do so in next week’s Budget. Britain will never get rich on dirty money, and our public services cannot function if the wealthiest individuals and the most powerful companies deliberately avoid paying their fair share towards the cost of those services. And this Government will not be forgiven if they fail to heed the lessons we can all learn from the Paradise papers. Proper transparency will come. The Government can choose whether they lead the changes needed or whether they want to be dragged kicking and screaming into implementing essential reforms. I hope they will listen, learn and act.

--- Later in debate ---

[Mel Stride]

I will now make some progress. I am aware that this is just a two-hour debate and that many Members wish to speak.

We have covered the various measures that we have taken, and we have covered the huge investment that we have made in HMRC. Perhaps I can now turn to the international aspects. We all agree that we need to look closely at what is happening in the international sphere. On that, this Government have a record of which we can be proud. Through the OECD, we have been in the vanguard of the base erosion and profit shifting project. We have worked closely with the Crown dependencies and overseas territories.

We have brought in a diverted profits tax, which will raise £1.3 billion by 2019, and common reporting standards to ensure that information is exchanged in relation to around 100 countries. We have introduced a directory of beneficial ownership that is accessible by HMRC, the authority that needs to have that information. All this has happened in the last couple of years, and it is a game changer. Many of the issues arising from the Paradise papers go back very many years, but these measures are in place right now.

I also want to make an important point on transparency. In last week’s debate, I asked the right hon. Member for Barking, in relation to the 13 million files held by the International Consortium of Investigative Journalists, whether she would join me in calling on the ICIJ to release that information to HMRC so that we could go after anyone who, as a consequence of that data release, was thought to be abusing our tax system. Will she support us in that endeavour?

[Dame Margaret Hodge]

The Minister did raise that point last week, and the House should know that it is not in the gift of either The Guardian or “Panorama” to release those papers. They are not able to do that.

[Mel Stride]

What I actually asked was whether the right hon. Lady would join me in calling for the ICIJ to release that information. [Interruption.] That is a slightly different question, and I am happy to give way again if she will tell us, yes or no, whether she will do that. [Interruption.]

[Mr Speaker]

Order. Stop the clock. There is far too much noise in this Chamber. I say gently to the Parliamentary Private Secretary, the hon. Member for Croydon South (Chris Philp): don’t do it! You may think you are being clever, but it does not enhance your reputation as a parliamentarian in the end. Please don’t do it. It is juvenile, the public despise it and I have no patience for it.

[Dame Margaret Hodge]

I will certainly join the Minister in seeking any documentation that HMRC requires to pursue those who are guilty of avoidance or evasion. I would say to him, however, that when I have given papers to HMRC in the past—whether relating to Google or from other whistleblowers—they have just disappeared and no action ever appears to have been taken.

[Mel Stride]

I am grateful to the right hon. Lady. I will take that as a yes—we can work together to try to ensure that that information is provided to HMRC. I see no reason why that should not happen.

--- Later in debate ---

[Dame Margaret Hodge]

I am grateful to you, Mr Speaker, for allowing this debate, and to all Members who have participated, particularly those who looked beyond narrow political party interest and more at the public interest.

We cannot allow the serious issues raised by the Paradise papers today simply to become the fish and chips wrappers of tomorrow. It is our responsibility as lawmakers to do all that we can, in the UK and with our international partners, to stamp out an injustice that is both unfair and offensive. The Government can take action that will make a difference, and it simply needs a strong political will to make that happen. I urge the Government to act in next week’s Budget.

Question put and agreed to.

Resolved,

That this House has considered the systemic issues enabling tax avoidance and evasion uncovered by the Paradise Papers.

[James Duddridge (Rochford and Southend East) (Con)]

On a point of order, Mr Speaker. Have you heard from the Foreign Office of an intention for a Minister to come to the House to make a statement on what appears to be an ongoing coup in Zimbabwe?

Tax Avoidance and Evasion (Isle of Man)

Margaret Hodge Excerpts

Tuesday 7th November 2017 Commons Chamber

[Dame Margaret Hodge (Barking) (Lab)]

Thank you for selecting this issue for debate, Mr Speaker. I thank the Minister and my hon. Friends for being in the Chamber tonight.

The past few years have seen a mountain of leaked documents: the Panama papers; the Falciani papers; the Luxembourg leaks; and those about the so-called Russian laundromat. Less than three weeks ago, I secured an Adjournment debate based on leaked documents about Azerbaijan and the money laundering activities of its ruling elite.

All those important leaks involved substantial disclosures that exposed money laundering, aggressive tax avoidance and possible tax evasion. They revealed how the proceeds of organised crime have been used, and how powerful global corporations and the super-rich use nefarious, unethical and sometimes criminal financial wheezes to hide their money and avoid their taxes.

Then, on Sunday night, we started to hear about further outrageous wrongdoings in the Paradise papers. The leaked papers reveal documents that passed through the global law firm Appleby, mostly operating out of our own Crown dependencies and overseas territories. They reveal a completely toxic mixture of every imaginable wrongdoing involving money—wrongdoing on an industrial scale, with household names, revered institutions, global corporations and international criminals implicated. I am afraid that that wrongdoing is not just ignored or condoned by the UK Government and our regulatory bodies, but only made possible by our rules and practices. We are not just complicit in what happens; we are central to its success.

Our country, our tax havens and our corporate structures have become the place of choice for every ne’er-do-well who wants to hide their wealth and avoid tax. If our Government are serious about guaranteeing a fairer society, and if they mean what they say about an economy that works for everyone, they really have to tackle tax avoidance and tax evasion, rather than just claiming progress by tinkering at the edges. They must start by clamping down on our own tax havens—the British overseas territories and Crown dependencies. This does not need another inquiry; it needs action now.

I pay tribute to all the journalists in 67 countries who worked through the International Consortium of Investigative Journalists to uncover these wicked practices and open them to public gaze and public scrutiny. In particular, I congratulate—

--- Later in debate ---

Motion made, and Question proposed, That this House do now adjourn.—(Nigel Adams.)

[Dame Margaret Hodge]

In particular, I congratulate the team at The Guardian and “Panorama” on their brilliant investigative work to make sense of the tens of millions of documents and files that the leaks contained. This is journalism at its best and I salute all the journalists.

I also want to salute the brave whistleblower who put him or herself at enormous risk by passing the papers to the media. Every time this happens, the accused attack the accusers—the whistleblowers—and try to undermine their credibility. In this case, Lord Ashcroft’s public relations agent told The Guardian that Lord Ashcroft would not comment because

“you are referring to stolen data.”

The whistleblower obtained the information in the public interest; they did not steal it for private gain. Unlike Lord Ashcroft, the whistleblower was driven not by selfish greed, but by public-spirited, selfless bravery. That should be commended, not defamed.

In the next few days, we will see more data about famous rich people, about greedy global corporations, and about advisers—lawyers, accountants, bankers and other clever people who give advice to rich people about how best to hide their money. All are guilty of immoral if not illegal behaviour. It must be completely obvious to us all that anybody who is found to have used artificial financial structures offshore simply to hide their wealth and to avoid tax should not be awarded with an honour from the Queen. Lewis Hamilton should not receive a knighthood. Anybody in the political system who has deliberately used offshore accounts in tax havens to hide their money and avoid paying their fair contribution, through the taxes they pay to the common purse for the common good, should not, in my view, hold public office.

Much attention in the past 48 hours has been focused on the royal family and the funds held by the Duchy of Lancaster, and today’s focus has been on funds held by the Duchy of Cornwall. The royal family command admiration, respect and love across all the world. I am in no doubt that the Queen was as appalled as the rest of us to discover that her money had been invested offshore in Bermuda and the Cayman Islands, and that some of her money was invested through the private equity firm Vision Capital in unethical companies such as BrightHouse. BrightHouse rips off poor people who have no other option than to rent essential household goods from it, meaning that they can end up paying £1,092 for a washing machine that retails at £358. Indeed BrightHouse has just been forced by the Financial Conduct Authority to pay back £14.8 million to nearly a quarter of a million customers.

This is the Queen’s money invested offshore in unethical businesses. If there had been proper transparency in the Duchy of Lancaster’s affairs, this would never have happened. If the Treasury had properly monitored the financial affairs of the Duchy, the Queen’s reputation would not have been tarnished. Will the Minister please explain why we cannot have transparency in the affairs of the Duchy of Lancaster? Why did the Treasury fail to monitor the Duchy properly, sanctioning investments in offshore jurisdictions? The fact that the Queen’s financial advisers saw nothing wrong with investing offshore in dodgy companies shows how deeply entrenched and acceptable the practices of hiding wealth offshore and avoiding tax have become. It is the establishment norm for the rich and powerful, yet it is plain wrong and we need to stop it.

I wish to focus on issues that have not yet received the public scrutiny and attention that they deserve. The Paradise papers contain details of a tax scam that operated out of the Isle of Man, facilitated by the law firm Appleby, with advice from one of the big four accountancy firms, EY—Ernst and Young. It is a lethal cocktail of accountants, lawyers and the super-rich. This is how the scam works. The super-rich buy private jets, which can cost anything up to £70 million. Lewis Hamilton spent £16.5 million on his. To avoid paying VAT on the purchase, the rich buy their private jets through companies they set up in tax havens. Lewis Hamilton used the British Virgin Islands and avoided VAT. Owners want to fly their planes in Europe, however, for which they need a certificate issued by a European jurisdiction to show that they have accounted for VAT and any other taxes.

At this point, in steps the Isle of Man, a jurisdiction that boasts the Queen as Lord of Mann. The advisers, EY and Appleby, create a company in the Isle of Man, controlled by the private jet owner Lewis Hamilton, which leases the jet from the BVI company controlled by Lewis Hamilton. The Isle of Man Government issue a VAT refund on the grounds that the jet is part of a leasing business, although the only customer is one Lewis Hamilton. The Isle of Man company then leases the jet to another offshore company in Guernsey, which is also controlled by Lewis Hamilton. This carousel of leasing companies, all controlled by Lewis Hamilton, exists simply to enable Lewis Hamilton to avoid a £3.3 million VAT bill, yet the plane has been leased only to Lewis Hamilton and he has never returned to the Isle of Man in his jet. Lewis Hamilton may wrap himself in the Union flag at Formula 1 races, but he should hold his head in shame at his contrived and deliberate refusal to pay the British taxes he should.

In the 10 years since the Isle of Man launched its aircraft registry, it has let hundreds of private jet owners off £790 million in VAT bills. It has never, ever turned down a request for a full VAT refund. Even if some of the VAT exemption was legitimate, in that the planes were used for some commercial rather than a personal purpose, a huge chunk of that money should have been paid to the Exchequer. Will the Minister tell us why Her Majesty’s Revenue and Customs has allowed this to happen? At best, the scheme is artificial and potentially unlawful; at worst, Lewis Hamilton deliberately lied about using his jet for commercial purposes. Either way, money that we urgently need for our hospitals and schools is not being collected while the rich jet-setters simply get richer.

The Isle of Man has 80,000 inhabitants, who enjoy the highest living standards in the UK. The Isle of Man Government have issued a statement saying that they

“have found no evidence of wrongdoing or reason to believe that our Customs and Excise has been involved in the mistaken refunding of VAT.”

In my view, that is simply not true. The details in the Paradise papers demonstrate clearly that they knowingly and purposefully bend the interpretation of the rules to help the super-rich to avoid VAT. The Isle of Man is a tax haven that thrives on secrecy and half-truths. Since 2007, the Isle of Man has had a zero corporate tax rate for all businesses—domestic companies and offshore ones—except for banks. That was why Apple had the Isle of Man on the list of tax havens when it held its beauty contest as it looked for a new country to house its money.

By the way, for Apple to piously declare that it is not paying less tax in Jersey than it was in Ireland as evidence of its good behaviour beggars belief. Of course it is not paying less tax, because it was not paying much tax in Ireland before. We want Apple to pay more tax—fair tax and proper tax—on the profits it makes from its business outside the USA.

Back to the Isle of Man, one might ask how this small country can afford to raise enough in taxes to run its public services without any contribution from corporation tax. The answer is simple: we subsidise it. It is our tax money that substitutes for the tax income that it could receive from charging businesses properly. It is our money that enables it to be a tax haven. Our Government do not just tolerate tax havens; they are using our taxes to enable the Isle of Man to operate as a tax haven. As with all these things, the Government refuse to be transparent, so let me try to unravel this.

Because we and the Isle of Man share a border, we also share what is called a common purse for VAT and other import duties. All VAT and import duties collected by the Isle of Man are passed to Her Majesty’s Revenue and Customs, and then the Exchequer gives the Isle of Man a sum on the basis of a formula that is supposed to reflect how much VAT has been generated from the economic activity that takes place there. In 2016, the then Chief Secretary to the Treasury renegotiated the formula and agreed a generous annual uplift of way above the level of inflation.

We give the Isle of Man more than £300 million a year, which is just under one third of its entire budget for public expenditure. That figure is set to rise to £340 million by 2019. This sum appears to have nothing to do with what is happening in the Isle of Man’s real economy, where employment is down and the population is declining. It has everything to do with what seems to be a deliberate policy intention of our Government to subsidise the Isle of Man and thus promote and support it as a tax haven. The Treasury has refused to publish the details of the formula on which our payment is based. I ask the Minister to release those details so that we can see how the sum is determined.

What this shows is that we are not innocent bystanders who simply put up with the utterly unacceptable activities in tax havens that have been exposed in the Paradise papers. We actively support and enable tax havens to function and exist. Without our subsidy, the Isle of Man could not afford to have a zero rate of corporation tax and could not function as a tax haven. The Isle of Man is well and truly a UK tax haven. Far from being at the head of the fight against tax avoidance and evasion and money laundering, we are at the heart of the evil conspiracy involving advisers, the super-rich, global corporations and Governments. We are aiding and abetting the very few wealthiest and most powerful in our society to keep their wealth secret and avoid paying their fair share of tax.

The Minister will try to claim that his Government have achieved a lot to tackle avoidance and evasion. He might try to say how much better his Government have been than the previous Labour Government. I have never defended the record of the Labour Government in this area, but his Government’s record is also shameful. It is not what is done that really matters, but what is left undone.

I urge the Minister to tear down the shroud of secrecy and force all our tax havens to have public registers of beneficial ownership. This simple ask for better transparency about who owns what and where is utterly central to our desire to expose avoidance and hence stamp on it. I ask him to toughen up our regulatory bodies and to hound the Bonos, the Mrs Brown’s Boys and the Lewis Hamiltons of this world through the courts to make sure that they pay their proper dues. I ask the Minister to introduce legislation that will ensure that the advisers who dream up these tax avoidance wheezes are held to account for what they do, and held responsible and punished when schemes that they invent are found to be unlawful. Those three actions would go a long way to ensuring we have a responsible tax system that is fair to us all. I look forward to his response.

Paradise Papers

Margaret Hodge Excerpts

Monday 6th November 2017 Commons Chamber

[Dame Margaret Hodge (Barking) (Lab)]

The real problem with all the action that has been taken so far is that it has not got to the heart of the issue, which is that we need to have openness and transparency about who owns what company and where, and who owns what trust. There is a very simple action that the Government could take without any legislation, and that would immediately slice through a lot of the problems that we have seen in the Paradise papers, the Panama papers, the Falciani leaks and the Luxembourg leaks. Why will the Government not insist now that our overseas territories—our tax havens—have public registers of beneficial ownership?

[Mel Stride]

As the right hon. Lady knows, there are many good reasons why, for perfectly honest and decent purposes, individuals use trusts. She also knows that we have made a great deal of progress on the common reporting standard across 100 different countries, including those to which she alludes. We are also bringing forward the registers of beneficial ownership across those jurisdictions so that HMRC has the information that it requires.