My Lords, taxpayer confidentiality is key to the effective operation of the tax system. Taxpayers have confidence that the sensitive information that they give to HMRC will be protected and this trust underpins the high levels of voluntary tax compliance that the UK enjoys. The public benefit of taxpayer confidentiality lies in the overall effectiveness of the tax administration that it significantly supports.
My Lords, with all due respect, I cannot for the life of me understand the Minister’s Answer. Surely we have to seek the right balance between confidentiality and integrity in our tax system. Transparency in our tax returns would add to the integrity of the tax system and ensure that HMRC had an easier job to do. I suspect that most Members of this House pay more in income tax than Facebook does.
My Lords, I agree with the noble Lord that there is a debate to be had about greater transparency, whether on the part of HMRC or on the part of large businesses. The Government have signalled this by recently proposing to take forward a system of country-by-country reporting for large businesses on a multilateral basis. But we think that there are good reasons for having confidentiality within which transparency can work. It promotes trust and voluntary compliance and it encourages businesses to be more open and to share proprietary information with the tax authorities.
My Lords, how can the Minister possibly say that when Clause 88 of the Housing and Planning Bill will make it possible for HMRC to reveal information to people who are not in the government department? There is an inconsistency in the Government’s position. I am sure that the Minister sitting next to him will explain that what I am saying is correct; I have the Bill here.
I do not need the Minister who is sitting next to me to believe that what the noble Lord has said is correct. The fact is that HMRC has a principle of confidentiality. It is obliged under a law passed by the Labour Government in 2005 to respect confidentiality. The only time that it is able to divulge information is when it has statutory authority to do so as passed by Parliament.
My Lords, is it not incumbent on the Government to recognise that the public are losing patience with the fact that large companies, in particular multinationals, are getting away with paying minuscule amounts of tax in relation to their turnover in the United Kingdom? This issue needs to be tackled. Surely the Government should be addressing why HMRC was unable to get more than £130 million out of Google over a decade when the company had a turnover of more than £4 billion in any one year. As we know, Google is not the only case. Starbucks and of course Amazon were brought to book by public response, when the public set about boycotting those businesses as they were being so unfair. The Government must recognise that just hiding behind the doctrine of confidentiality will not do and that the tax authorities have to be much more efficient than they have been in the past.
I do not think that it is true to say that the tax authorities are hiding behind the doctrine. The doctrine of confidentiality that the noble Lord mentioned was passed by a Labour Government under the 2005 Act. As for Google, which is not the subject of this Question, the noble Lord should know, if he does not know already, that the tax that Google paid was based on taxable profits, not on turnover.
My Lords, I find transparency very attractive, but does the Minister agree that a company’s tax should not be determined by the attitude of its PR department or even by its charitable ethos and that HMRC needs to put in place tough standards? Will the Government review the structure of business taxes so that global businesses cannot use tax manipulation as a way to outcompete domestic businesses and small businesses as they do today?
My Lords, the question is whether the public trust HMRC. It has a system of challenge. It is challenged by Parliament and the Public Accounts Committee, and the National Audit Office is entitled to look at all the records of HMRC, which it has done in the past.
My Lords, poor old HMRC comes in for a bashing the whole time. Is it not a fact that it is trying very hard to get this tax and that it is improving year by year? I received my form for the next tax due at the weekend and, for the first time in my life, I was able to understand it—and it is not that I have been to Specsavers.
My Lords, as I think I said earlier, we agree that there is a debate to be had about transparency. That is why the Government have already proposed to take forward a system of country-by-country reporting on tax payments from multinationals. The Chancellor asked that that should be made public. We are publishing details of avoidance schemes and of deliberate tax defaulters. Following consultation last year, large businesses will be required this year to publish details of their tax strategy.