Treasury Questions

1st March 2016

David Gauke answers MPs’ questions on tax.

Tax Disputes

6. Neil Gray (Airdrie and Shotts) (SNP): What support his Department provides for British citizens involved in tax disputes with other countries. [903820]

The Financial Secretary to the Treasury (Mr David Gauke): Tax treaties provide protection for UK citizens from discriminatory taxation in other countries. The UK has one of the largest treaty networks, with more than 120 treaties in force. Her Majesty’s Revenue and Customs cannot intervene where a taxpayer is in dispute with a foreign revenue authority on a domestic issue. However, where a UK resident believes that a treaty partner is not applying the treaty properly, they can request HMRC to raise the issue with the other revenue authority.

Neil Gray: I thank the Minister for that helpful answer. My constituent David Duncan is currently being pursued by HMRC’s mutual assistance in the recovery of debt team for a tax payment relating to a time when he was residing in Germany but working in South Korea. Mr Duncan had been assured by his employer that he would have to—

Mr Speaker: Order. I am sorry but this is just too long. This is a story, not a question. One sentence. What is it?

Neil Gray: Will the Minister advise on what help is available to my constituent at this time in dealing with and resolving that issue between Germany and South Korea?

Mr Gauke: As I said in my answer, it depends on the nature of the dispute, but if the hon. Gentleman wishes to write to me, I will look at it and get back to him.

Mr Speaker: Thank you.

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Small Businesses

10. Neil Carmichael (Stroud) (Con): What fiscal steps he is taking to encourage small businesses to grow. [903824]

The Financial Secretary to the Treasury (Mr David Gauke): The Government are cutting taxes to encourage small businesses to grow. Corporation tax will fall to 19% in 2017 and 18% in 2020—the lowest in the G20. The employment allowance will rise by 50% this April, giving employers a £3,000 discount on national insurance contributions, and the Seed enterprise investment scheme supports investment in small, early-stage companies, helping more than 2,900 companies to raise over £250 million.

Neil Carmichael: Does the Minister agree that that impressive package for small businesses will equip them to benefit from the extension of the single market as negotiated by the Prime Minister, including in energy and services, and that this provides an even more emphatic case to remain in the European Union?

Mr Gauke: There are nearly 100,000 firms employing fewer than 50 people that export goods to the European Union, and we want to assist them. Access to the single market is very important to those businesses and the 800,000 people they employ.

Richard Burgon (Leeds East) (Lab): The plans to move towards quarterly online tax reporting are proving to be deeply unpopular with small businesses, so will the Chancellor confirm the impact on administration costs for small businesses of the Government’s plans for quarterly reporting to Her Majesty’s Revenue and Customs?

Mr Gauke: Overall, the Government are clear that HMRC’s target is to reduce the burden on businesses by £400 million by the end of this Parliament. Moving towards a digital taxation system is something that can help businesses to reduce their costs. We are consulting on the details, but let me make it absolutely clear that there will be no quarterly tax returns, as it has been wrongly reported that there will be in some cases.

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Taxation of Earnings

13. Jack Lopresti (Filton and Bradley Stoke) (Con): What fiscal steps he is taking to help people keep more of their earnings. [903827]

The Financial Secretary to the Treasury (Mr David Gauke): The Government have committed to raising the personal allowance to £12,500 and the higher-rate threshold to £50,000 by the end of this Parliament. At the summer Budget, the Government took the first steps towards meeting these commitments by increasing the personal allowance to £11,000 and raising the higher-rate threshold to £43,000 in 2016-17. Twenty-nine million people will pay less tax after these changes and 570,000 will be taken out of income tax altogether.

Jack Lopresti: Does the Minister agree that it would be better to encourage savings by allowing people to keep more of their own money by increasing the tax limit on pensions rather than reducing it, particularly at a time when savers are struggling to get decent returns?

Mr Gauke: As a Government, we want to encourage more saving. We have taken steps to reform our tax system so that pensions become more attractive, but we also need to ensure that the costs of pension tax relief are targeted in the right direction.

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Topical Questions

T2. [903806] Mike Kane (Wythenshawe and Sale East) (Lab): The OECD has estimated that tax havens are costing developing countries three times the global aid budget. Does the Chancellor share my frustration over the fact that the UK overseas territories have ignored the pleas of the Prime Minister, and have not introduced beneficial ownership registers? What more can be done to end the secrecy and inaction?

The Financial Secretary to the Treasury (Mr David Gauke): The United Kingdom is leading the way in respect of a public register of beneficial ownership, but other countries, including the overseas territories, are not committed to that. We continue to engage with them, because we believe that they should follow the same direction as us—as, indeed, should other countries.

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T4. [903808] Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP): Figures from the Public and Commercial Services Union show that 2,000 HMRC staff in Scotland face redundancy, including 150 experienced and dedicated people in Inverness. At the same time, the HMRC overtime bill is about £6 million a month. Can the Chancellor explain to my constituents how that makes any sense at all?

Mr Gauke: HMRC is engaged in changes that will be focused on 13 regional centres across the United Kingdom. The same proportion of its work force will continue to be in Scotland, which is actually a larger percentage than the population of Scotland. We are seeking to improve the efficiency of HMRC, and we believe that regional centres will enable it to achieve more for less. It is already bringing in more money and a better rate of return than we have ever had before.

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Dame Angela Watkinson (Hornchurch and Upminster) (Con): The local economy in Hornchurch and Upminster comprises thousands of small businesses. Can the Chancellor offer any encouragement to the Federation of Small Businesses, which is pressing for tax simplification in order to reduce the burden of tax administration for small businesses?

Mr Gauke: One of the areas in which we can make progress is the digitisation of the tax system, which could help a lot businesses. I would also make the point that the Office of Tax Simplification has been strengthened and we are putting it on a statutory footing. We are looking forward to seeing a couple of reports from it over the next few days on what we can do to help small businesses in particular.

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T9. [903813] Dr Philippa Whitford (Central Ayrshire) (SNP): When services that have been removed from local authority control and centralised in England have been granted the right to reclaim VAT, does the Chancellor accept that the refusal to grant that right to Police Scotland—making it the only UK force to pay VAT—just looks vindictive? Will he not reconsider that decision?

Mr Gauke: To be fair, the position on reclaiming VAT was made perfectly clear when the Scottish Government made the decision to go down this course. The UK Government are simply pursuing the policy that we always said we would pursue.

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