Raising the Issue Tax Avoidance in the Finance Bill No.2 Debate

On Wednesday 25th March, I spoke in the Finance Bill No.2 debate to raise an issue I know many of you are concerned: tax abuse and avoidance. I spoke with the Minister about the General Anti-Abuse Rule, which is a targeted anti-avoidance rule. I support strong legislation and measures to combat and prevent tax avoidance, and I know many of you support this.

I welcome the Minister’s commitment to tackling tax avoidance. Since April 2010 the Government has made 42 changes to tax law, closing loopholes and introducing major reforms to the UK tax system. These include the introduction of a General Anti-Abuse Rule and strengthening the Disclosure of Tax Avoidance Schemes regime. The Government has invested £1 billion over the last four years to tackle tax avoidance and evasion. In addition, around 80 per cent of the avoidance cases heard in the courts are being won by HMRC, with 30 wins protecting £2.7 billion of tax in 2013/14.

You can read the full text of my exchange with the Minister below:

Nigel Mills MP: I do not wish to revisit old debates about simplification, but does my hon. Friend have a view about the future strategy on anti-abuse rules? I believe that when Graham Aaronson examined the general anti-abuse rule, he thought that after about five years we would be able to start to do away with individual anti-avoidance rules and rely on the GAAR. We could therefore remove some of the more complicated provisions and the loopholes that go with them. Does my hon. Friend think that could work, or does he think it should be ruled out and that we must have both the general and specific rules?

Financial Secretary to the Treasury, David Gauke MP: My hon. Friend does not want to revisit old debates, but I tempted to give a response that I suspect I have given him before. The general anti-abuse rule is a big step forward, and it was absolutely right that this Government introduced it. Other Governments had considered it but felt that it was not the right thing to do. However, it is there to complement the existing measures, and we will want to see how the GAAR works over time rather than rush to judgment. I do not believe that a future Conservative Government would want to risk opening up new loopholes because of uncertainty about exactly how the GAAR applies. It is of course an anti-abuse rule and sets a reasonably high bar for behaviour covered by it, and I suspect my hon. Friend agrees that that is right because of its broad nature. We will have to wait and see before I make any commitment to repealing various targeted anti-avoidance rules.

A number of constituents contacted me about the Finance Bill No.2, you can read more on the debate here.