The
Committee consisted of the following
Members:
Chair: †
Philip
Davies
†
Brown,
Lyn (West Ham) (Lab)
†
Burt,
Lorely (Solihull)
(LD)
†
Crockart,
Mike (Edinburgh West)
(LD)
†
Gauke,
Mr David (Exchequer Secretary to the
Treasury)
†
Goodwill,
Mr Robert (Scarborough and Whitby)
(Con)
†
Hanson,
Mr David (Delyn)
(Lab)
†
Harrington,
Richard (Watford)
(Con)
†
McDonagh,
Siobhain (Mitcham and Morden)
(Lab)
†
McGovern,
Alison (Wirral South)
(Lab)
†
Meacher,
Mr Michael (Oldham West and Royton)
(Lab)
†
Mearns,
Ian (Gateshead)
(Lab)
†
Phillips,
Stephen (Sleaford and North Hykeham)
(Con)
†
Pincher,
Christopher (Tamworth)
(Con)
†
Poulter,
Dr Daniel (Central Suffolk and North Ipswich)
(Con)
†
Pritchard,
Mark (The Wrekin)
(Con)
†
Raab,
Mr Dominic (Esher and Walton)
(Con)
Sheerman,
Mr Barry (Huddersfield)
(Lab/Co-op)
Wilson,
Sammy (East Antrim)
(DUP)
Eliot Wilson, Committee
Clerk
† attended the
Committee
Second
Delegated Legislation
Committee
Monday 1
November
2010
[Philip
Davies
in the
Chair]
Draft
International Tax Enforcement (Turks and Caicos Islands) Order
2010
4.30
pm
The
Exchequer Secretary to the Treasury (Mr David Gauke):
I
beg to move,
That the
Committee has considered the draft International Tax Enforcement (Turks
and Caicos Islands) Order
2010.
The
Chair:
With this it will be convenient to consider the
draft International Tax Enforcement (Liechtenstein) Order 2010, the
draft International Tax Enforcement (Gibraltar) Order 2010, the draft
International Tax Enforcement (Bahamas) Order 2010 and the draft
International Tax Enforcement (Anguilla) Order
2010.
Mr
Gauke:
It is a great pleasure to serve under your
chairmanship for the first time, Mr Davies. It is also the first time
since entering the House that I have served under a Chairman who is
younger than me. The orders deal with new tax information exchange
agreements—TIEAs—with Anguilla, the Bahamas, Gibraltar,
Liechtenstein and the Turks and Caicos Islands. The debate is somewhat
unusual in that the agreements were all negotiated and signed under the
previous Government, who left behind a significant legacy of signed tax
treaties, which the new Government are happy to bring to the Committee
for approval. We will debate another batch tomorrow and seek further
debates when parliamentary time
allows.
Both
sides of the Committee have long supported international tax
information exchange as a means of ensuring that countries can properly
enforce their tax laws. I can confirm that the Government will continue
to promote and implement the international standard in that area,
including through the negotiation and signing of more such
agreements.
In addition
to signing agreements, we will ensure that all jurisdictions comply
with their commitments and put into full effect the agreements that
they have entered into. We will do that by playing an active role in
the peer reviews now underway in the Global Forum on Transparency and
Exchange of Information, which will take place over the next three
years or so. The laws and practices of more than 90 jurisdictions are
scheduled to be assessed, and the UK, of course, will be assessed like
every other territory committed to the international standard. The
assessments made by the global forum will be published to enable
monitoring of progress.
The five
agreements we are considering today are largely identical, and they all
broadly follow the OECD model agreement on the exchange of information
on tax matters, which provides for information exchange on requests.
That is to say, the agreements provide for one territory to make a
request of another for assistance in a particular case under
examination or investigation. If the information sought is not held by
the tax authority
of the requested party, but is within the possession or control of a
person within its jurisdiction, it must use its domestic
information-gathering powers to obtain that information. The TIEAs also
provide for officials to visit the other territory to pursue or take
part in tax investigations.
Given
the similarities between the five agreements, I do not propose to
detain the Committee by describing each one at length. There are
variations in the scope of taxes and duties covered, as one would
expect, given that not all jurisdictions choose to fund public services
in the same way, but all of them extend to at least UK direct taxes and
VAT, which in practice are the areas where we need information from
overseas.
I
will say a few words about the Liechtenstein agreement, however, which
is slightly different from the others. That TIEA will enable the UK and
Liechtenstein to exchange information on taxes of all kinds to
international standards. In conjunction with the agreement, Her
Majesty’s Revenue and Customs and the Liechtenstein Government
entered into a memorandum of understanding in 2009, which provides for
a five-year taxpayer assistance and compliance programme and the
introduction by HMRC of a five-year disclosure facility lasting until
2015. The programme will allow UK tax residents with previously
undeclared assets in Liechtenstein to review and arrange their affairs
and settle their past UK tax liabilities. The programme is expected to
raise £1 billion over its lifetime. Some special adaptations
have been made to the TIEA to ensure that both it and the memorandum of
understanding can operate effectively in tandem. In conclusion, I
commend the orders to the Committee and am happy to answer any
questions that Members might have on their
provisions.
4.34
pm
Mr
David Hanson (Delyn) (Lab):
I, too, welcome you to the
Chair, Mr Davies. I can confirm, sadly, that you are also younger than
me. About two years ago I discovered that the next President of the
United States would be younger than I was, and now the Prime Minister
is younger than I am. It is one of the difficulties of the ageing
process.
I want to
thank the Minister for his explanation and for the offer from his
office to brief me. I received written information from his officials
that assisted me greatly. Suffice to say, we welcome the orders today
for tax information exchange agreements between the United Kingdom and
Liechtenstein, the Turks and Caicos Islands, the Bahamas, Gibraltar,
and Anguilla. Tax information exchange agreements are critical to
ensuring that residents of this country who have bank and investment
arrangements in other territories report that information properly to
our tax
authorities.
I
want to share with the Minister my satisfaction that we have reached
agreement with Liechtenstein. The previous Government and officials did
a lot of work to ensure that we had the disclosure agreement facility
available from 1 September last year to 31 March 2015. I particularly
appreciate the fact that it will raise around £1 billion in
unpaid taxes, which might be recovered over the five-year period of the
facility. That is extremely helpful.
The number of
overseas jurisdictions from which the UK may now request information is
significant, and growing all the time, and I want to give cross-party
support to that continuing. We will certainly scrutinise
such agreements, but we will also encourage the Minister to continue the
strategy to ensure that tax avoidance and tax evasion measures are
taken internationally as well as within the UK. I am pleased that at
the G20 summit in London last year we agreed to have more tax
information exchange agreements signed around the world by now than in
the whole of the previous decade. They assist tax avoidance and
compliance activities, and ensure that the right amount of tax is paid
at the right time in the right country. As the Minister has indicated,
figures for 2008-09, provided by the Treasury, suggest that about
£12 billion of extra revenue was collected due to the approach
that the previous Government commenced, and the present Government are
continuing, to ensure that we deal with the issue fairly and
equitably.
I
have one question only for the Minister; this is not one of party
political difference, but, you will note, Mr Davies, that
all of the agreements have the mustiness of a year’s spell
between initial signatures and coming to the House. That is not to say
that we, the officials or the current Government were slow about it.
What is the expected time scale between heads of agreement being
reached—as in letter exchanges such as those before the orders
today between various Governments or officials—and
implementation in a Committee such as this? What would the Minister
normally expect? Some of the agreements today are dated July 2009 in
letter form; it is now 1 November 2010. The longer the agreements are
not implemented, the more opportunity there is not to tighten up on the
letters before the Committee, I presume. With that caveat and
simple—I hope—question for the Minister, I am happy to
support the orders.
4.38
pm
Mr
Gauke:
I thank the right hon. Member for Delyn for his
support for the action that we are taking, which continues the action
of the previous Government. I recall sitting in his seat on
a number of occasions and expressing cross-party support from the
Opposition for development in this area. He is right to say that there
has been a great deal of progress over the past year or so. To some
extent, that explains the backlog. He raises a fair question about the
fact that most of the agreements were signed in 2009 and we can only
now bring them to Parliament. Much of that time, of course, was under
the previous Government, and I dare say that there was a great deal
that they wanted to get through, just as this Government want to get
through a lot of legislation. Finding parliamentary time is not always
easy. In opposition, I offered to proceed as quickly as possible with
the agreements and to allow as many agreements as possible to be dealt
with in one sitting, for example. We can address some of them in this
debate and some tomorrow.
Mr
Hanson:
Just to be helpful: given his responsibilities, is
the Minister able to set a target time between an agreement being
signed and parliamentary consideration? How long would he expect that
to take? There may be a range of reasons—including pressure of
parliamentary time, the general election and a new
Government—why this set of agreements has taken 15, 16 or 17
months to come to fruition. What is his future delivery target for the
agreements he is currently negotiating, through
officials?
Mr
Gauke:
The right hon. Gentleman raises a fair point about
the delay. That was due to the large number of agreements—both
tax information exchange and
double taxation agreements—signed in recent months. That is why
there is a backlog, which we are working hard to address. As I
mentioned, I was also keen to facilitate that when in opposition. I am
sure that we will have cross-party support on this
matter.
The
normal target between signing and coming to Parliament is six months.
That may vary. The right hon. Gentleman was right to say that there
will be exceptions. It will depend upon the volume of parliamentary
business and the number of agreements that we need to get through. By
and large, we try to work through the tax information exchange
agreements in the order in which they have been signed, when bringing
them to Parliament. That will mean that on occasions we will take
longer than six months to get through all of them. However, we would
normally work on around six months or so. I hope that in
future there will not be such a large gap, but that will depend on a
number of factors.
We still have
a number of agreements in the pipeline that need to be completed. For
example, earlier today I signed a tax information exchange agreement
with Liberia. We hope to be able to bring that to Parliament to
complete the orders. Much has gone on in this area, and the Government
are committed to proceeding as quickly as we can. The hon. Gentleman is
right to say that we do not want to sit on the orders for unnecessarily
long periods. Once we get through the backlog, and following a flurry
of signings since the G20 summit, we hope that we will be able to bring
them forward as quickly as we reasonably
can.
In
conclusion, we welcome the cross-party support in this area. The
Government are committed to the process, and hope that it will ensure
that more people will pay the correct amount of tax. Those who are
seeking to evade the tax that is rightfully due will have no place to
hide.
Question
put and agreed to.
Resolved,
That
the Committee has considered the draft International Tax Enforcement
(Turks and Caicos Islands) Order
2010.
Resolved,
That
the Committee has considered the draft International Tax Enforcement
(Liechtenstein) Order 2010.—(Mr
Gauke.)
Resolved,
That
the Committee has considered the draft International Tax Enforcement
(Gibraltar) Order 2010.—(Mr
Gauke.)
Resolved,
That
the Committee has considered the draft International Tax Enforcement
(Bahamas) Order 2010.—(Mr
Gauke.)
Resolved,
That
the Committee has considered the draft International Tax Enforcement
(Anguilla) Order 2010.—(Mr
Gauke.)
4.44
pm
Committee
rose.
