Tax Avoidance and Evasion — House of Commons, 2020-02-25
Topic: Macroeconomics
Margaret Eve Hodge (Labour, Centre-left): I am unaware of that specific allegation, but I will come on to facilitators, advisers and enablers who get away with far too much The only way we will start ensuring that digital companies pay the right amount of tax is by implementing country-by-country reporting. I asked the Chief Secretary and he did not reply, so I hope the Financial Secretary will reply to the question in his winding-up speech. When will this Government implement the country-by-country reporting that will allow us to see what activity takes place here, what profits are made here and, therefore, what fair tax should be paid here I reiterate to the Financial Secretary an issue that I raised with him in an Adjournment debate a couple of weeks ago, and to which he failed to reply at the time. Netflix has so far avoided public scrutiny, but it exports its profits by ensuring that subscribers pay into a server located in Holland. We reckon Netflix earned about £1 billion last year and paid no corporation tax, but in over two years it has benefited to the tune of £1 million from the high-end television tax relief. Not only was Netflix not paying tax, but it was benefiting from what is, in effect, a grant to encourage the production of content here in the UK I welcome such reliefs, but it seems utterly unacceptable that companies should benefit from grants offered through tax reliefs here in the UK yet behave in such an appalling way and refuse to pay their tax here. Now that we are Brexiting from Europe, surely it is not beyond the realms of possibility to introduce legislation so that companies will be eligible for such tax reliefs only if they show responsibility in how they behave and in paying their fair share of tax The other thing that really gets me with many of these American-headquartered companies is that the Americans, under Donald Trump, extract tax from profits earned through activity undertaken here in the UK. They extract tax at a lower rate but, nevertheless, they are getting more tax than we are, which is unacceptable. Americans are profiting from tax on profits and intellectual property created here in the UK I again ask the Minister what I asked him in the Adjournment debate and to which he refused to respond: will he extend the digital services tax to include streaming services? Will he stop those who deliberately avoid tax having access to grants and tax reliefs The hon. Member for Glasgow Central (Alison Thewliss) talked about creating a register of beneficial ownership of property, which David Cameron first promised us five years ago. Why is it important? The last figures I could get show that getting on towards 90,000 properties across the UK are owned by companies incorporated in tax havens The purchase and ownership of properties has become a key way in which money is laundered into the UK. Transparency International has established that one in 10 properties in just one London borough—Westminster —is owned by a company registered in an offshore secrecy jurisdiction. Private Eye claims that one in six properties sold in Kensington and Chelsea was bought by a company located in an offshore tax haven. This is a key way in which people launder money here The electoral register of Kensington and Chelsea is interesting. There has been a 10% decline in the register over the past decade or so, whereas registers have increased everywhere else in London. Why? Because people buy the properties and leave them empty. They simply use the purchase as a way of laundering money, and we know lots of that money comes out of Russia—about £70 billion has flowed out of Russia into the UK in the past 10 years When are we going to see that legislation? When will it be put before the House? When will we see the promise made a long time ago by a Conservative Prime Minister fulfilled by this Conservative Government Finally, the hon. Member for Glenrothes (Peter Grant) mentioned the role of advisers. It is the advisers who create these schemes. Whether they are banks, accountants, lawyers or just advisers on their own, they found schemes that are later deemed to be unlawful. Film tax credit and, most recently, the loan charge are good examples of schemes that have caused terrible hardship to people. I feel ambivalent about it because, of course, there is never something for nothing, and people should have been much more careful before they entered into such schemes. Nevertheless, they have led to suicides—they have been terrible schemes. Advisers always get away scot-free, whoever they are, and none of them is held properly to account. The law in this policy area is just too weak. In criminal law, we have to prove dishonesty to pursue a criminal prosecution, which is very difficult. In civil law, the penalties are ridiculously low and are limited to the amount of fee that the adviser would have gained. There is also what is known as a double reasonableness test: it cannot be regarded just as an unreasonable course of action; it also has to be demonstrated that it was unreasonable to think it was reasonable—I hope that makes sense to Members The calling to account of advisers, enablers and promoters would be a powerful tool. At a stroke we would kill off many of the schemes that are currently exploited, which lead to such tax loss in this country. I urge the Minister to bring forward legislation to toughen up the regime and to make it easier to hold the advisers, enablers and promoters to account In conclusion, it is vital to battle against tax evasion—it is vital to demonstrate fairness in our system, to ensure the proper funding of our public services, and to the building of a global Britain that is respected around the world for its values and integrity and that is seen as a good place to do business. The Government will pay a heavy price if they fail to respond properly to the issues that have been raised in this debate. They must not just give us warm words; they have to give us tough action. I hope that in my short contribution I have given the Minister some good ideas that he could easily implement and that would make the world of difference. I urge him to have regard to them.