Session 2010-11
Publications on the internet
General Committee Debates
Delegated Legislation Committee Debates

DRAFT International Tax Enforcement (Turks and caicos islands) order 2010
DRAFT International Tax Enforcement (Liechtenstein) order 2010
DRAFT International Tax Enforcement (Gibraltar) order 2010
DRAFT International Tax Enforcement (Bahamas) order 2010
DRAFT International Tax Enforcement (Anguilla) order 2010

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

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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

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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

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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

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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.  


That the Committee has considered the draft International Tax Enforcement (Turks and Caicos Islands) Order 2010. 



That the Committee has considered the draft International Tax Enforcement (Liechtenstein) Order 2010.—(Mr Gauke.)  



That the Committee has considered the draft International Tax Enforcement (Gibraltar) Order 2010.—(Mr Gauke.)  



That the Committee has considered the draft International Tax Enforcement (Bahamas) Order 2010.—(Mr Gauke.)  



That the Committee has considered the draft International Tax Enforcement (Anguilla) Order 2010.—(Mr Gauke.)  

4.44 pm 

Committee rose.