Tax Avoidance and Evasion — House of Commons, 2020-02-25
Topic: Macroeconomics
Peter Grant (Scottish National Party, Centre-left): I am pleased to be able to take part in this debate and it strikes me that there is a fair amount of agreement, but somehow we seem to be managing to create disagreement instead of agreement, which I have to say is one of the hallmarks of this Parliament in comparison to other Parliaments around the world It does seem to me that when we have a discussion about tax, too often on the Government Benches there seems to be an underlying assumption that somehow tax, and income tax especially, is bad. Even though they cannot actively and publicly promote irresponsible tax avoidance, it almost seems as if in their heart of hearts they do not quite see what the problem is. For example, the oft-repeated and completely fallacious claim that Scotland is the highest taxed part of the United Kingdom is completely false. Why is it automatically a bad thing, even if it is true? If for somebody on my salary Scotland is the highest taxed part of the United Kingdom, that is good. If, for somebody struggling to get by on a low-paid, part-time job, Scotland is the lowest taxed part of the United Kingdom, surely that is also good. I sometimes wonder how many Government Members, in their deepest instincts, genuinely believe the conciliatory comments that we have heard from some of their colleagues today that tax is a good thing and that we should all be happy to pay our taxes. When we look at the Register of Members’ Financial Interests and at some of the companies that are bankrolling Conservative MPs, we have to wonder whether they are bankrolling them in the expectation of getting absolutely nothing back in return The hon. Member for Delyn (Rob Roberts) spoke about legitimate forms of tax avoidance, and I do not have a problem with that; I do not have a problem with the tax system giving incentives to people to encourage them to do things that provide a wider public benefit, such as giving money to genuine charitable organisations; investing in genuine businesses that need an injection of capital to grow and to create employment; and investing to make sure that their own and their family’s future is financially secure when they are no longer able to work. All those things provide a wider public benefit and it is right that the tax system should encourage them. What public benefit is provided when a company electronically transfers billions of pounds of profits into a non-existent letterbox in the Cayman Islands? That generates no public benefit to anybody, so why do we have a tax system that, either deliberately or unintentionally, encourages exactly that kind of behaviour Although some progress has been made, with a more aggressive approach to dealing with legalised tax avoidance than there was in the past, it still does not go anything like far enough. My hon. Friend the Member for Glasgow Central (Alison Thewliss) commented on how easy and cheap it is to set up a company structure for no reason other than to avoid taxes. Many of my constituents, and many in all of our constituencies, would find it easier to set up a company to dodge taxes than people are finding it to prove to the Home Office settled status scheme that they have the right to live and work here and pay their taxes. What kind of regime is it that makes it harder for people to live here and pay their taxes than it is for people to dodge their taxes A lot has already been said about the concept of the Scottish limited partnership. I recall that as a young student accountant many years ago I memorised the Partnership Act 1890 by heart. It is a short and fairly simple piece of legislation. I recall that at the time there was a reason why section 4(2) was a good idea—why it was a good idea that in Scotland a partnership had a legal entity of its own. I cannot remember what the benefit was, but I am pretty sure that our predecessors in 1890 did not put those 17 words into that Act just to allow the good reputation of Scotland’s financial services sector to be abused by international criminal gangs in order to launder billions of pounds of criminal funds through the wonderfully respected financial services centre that is the city of Edinburgh and indeed through other cities in Scotland My hon. Friend commented on the number of companies advertising their ability to set up tax-dodging companies for people and how easily we can find them on the internet. Such a partnership has been described as "an ideal solution for those who prefer to operate…in the EU"— this is perhaps a wee bit out of date— "and to have a totally tax-free facility" That quote came from TBA & Associates Tax Business Advisors Ltd, whose registered office is not a million miles away from here In finishing, I wish to read out a quote from Shepherd and Wedderburn LLP, one of Scotland’s best known and most respected firms of commercial lawyers. It said: "Scotland’s global reputation in the funds and financial services sector, as a respected and safe jurisdiction in which to undertake business, can be exploited by the Scottish LP in an effort to add credence to an otherwise fraudulent scheme." If even the businesses that are advising their big commercial clients on how to reduce their tax liability are flagging up the fact that the existence of that loophole in Scottish partnership legislation is a bad thing for the Scottish economy, how can the Government not understand that? If they are not prepared to act on it, they should give the Scottish Parliament the right to regulate that aspect of Scottish business. Believe me, the Scottish Parliament will deal with it very, very quickly Let me make one final comment. A lot has been said about the loan charge, both in this debate and in previous debates. I have seen worrying reports recently suggesting that HMRC is offering an easy ride to the companies that have made billions out of advising their clients to go into these schemes in return for co-operation—basically, this is about shopping their own clients to HMRC. Again, the little guy gets done and the big guy—the big business—gets off scot-free. I hope that the Minister will give a categorical assurance that no such offers have been made and no such offers ever will be made to the big companies who are the genuine villains of the loan charge scandal.