Mark Garnier
MP for Wyre Forest · Conservative · United Kingdom
“Many commentators have commented about public sector productivity underperformance. EY tells us that the public sector has underperformed to the point where it has cut GDP growth by 3% since 2019. The Institute for Government highlights an average of nearly 1% underperformance every year for that same period.”
“My right hon. Friend raises another big argument that we could have on the issue of rural broadband, but it is worth making the point regarding internet connectivity that I was just coming on to. I know this is as painful in other constituencies as it is in Wyre Forest.”
“I remember the impact that was felt in 2015 when HSBC closed the last bank in Bewdley in my constituency; people were utterly dismayed. Happily, the post office stepped in and was able to help resolve the issues, but since then we have now discovered that that the post office is under threat.”
“As I say, I am not an apologist for banks, and I am keen to ensure that we get a balanced argument. The hon. Lady is absolutely right that that is an awful lot of money, but it all comes down to what should be the right and proportionate response.”
“If a branch is not viable, should the bank keep it open? We must look at the other opportunities. The last Conservative Government recognised that and were committed to retaining vital banking services.”
“New York is the biggest financial services centre in the world and London is the second biggest, but in New York, 80% of the turnover is driven by the domestic market of America, while just 20% is international; those numbers are reversed in the UK, where 80% of the activity is international.”
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“Recipients, on the other hand, will only be able to address the technicalities of the arrangements, with no opportunity to have the wider picture taken into consideration. The recipient may just be an unwitting enabler, unable fully to appeal the notice. Therefore, will the Minister again outline how the Government will ensure that individuals can appeal against the notices? Clause 168 outlines the civil penalty regime. Under the Government proposals, the recipient of a promoter action notice will be required to pay £1,000 per day for non-compliance. A recipient of a promoter action notice may challenge that at a tribunal, which is good. However, there is no suspension period provision. Should a recipient challenge HMRC at a tribunal, the penalty of £1,000 per day will still apply as the tribunal considers the appeal.”
“I agree. At the end of the day, we want to nail down people who have promoted those dodgy things, but at the same time we are a country with justice. If it takes more than 30 days on a regular basis to respond to such things, it is absolutely right that we would have longer time in order to help—but as with all such things, it is always a fine balance. Clause 167 outlines the appeal process for people who receive a promoter action notice. Under the clause, the recipient can only appeal if they are not providing a critical service to the promoter specified, or the goods and services are not being used wholly or partly for the promoter’s avoidance arrangements. The Association of Taxation Technicians has outlined the unfairness of that, given that promoters are able to challenge HMRC’s core allegations at a tribunal.”
“Therefore, I would be grateful if the Minister could set out the rationale to protect legally privileged material but to exclude other types of advice from the list of exemptions, and to say whether the Government would consider—again—introducing changes to this clause to level the playing field.”
“That is important, and we are not arguing that the Government should remove that exemption. However, the point has been made to us by industry bodies that legal professional privilege does not extend to advice provided by tax advisers or accountants. The Economic Secretary to the Treasury, who is the expert on the Government Benches, looks up and—I hope—understands that point. That is despite the fact that a person would ask for advice on tax policy from an adviser or an accountant in the same manner that a person would ask for legal advice from a lawyer. Again, we understand that this clause is about tackling tax avoidance and the promoters of it. However, without additional exemptions it could result in people or entities being disincentivised from seeking advice from tax advisers or accountants based in the UK.”
“The wording of the clause, whether that be the title or the text, insinuates that this is not an option that is available. Therefore, we feel that clarity is required from the Government. The Chartered Institute of Taxation recommends adding the words: “making representations against the notice” to clause 182(2). This is a sensible recommendation, and I hope that the Minister will see it as such and commit to looking at adding these words before the Bill returns on Report. The other issue that has been raised with us is regarding clause 183. This clause sets out which categories of information cannot be required under anti-avoidance notices. More simply, this means that material that may be legally privileged between a lawyer and a client would be exempt from these notices.”
“Clauses 174 to 185 relate to anti-avoidance information notices. They also provide that they can be issued to connected persons, third parties and financial institutions. The make mostly technical amendments, but there are two technical amendments that we believe are missing from this grouping. Rather than go through every clause, I will concentrate on two. First, clause 182 restricts how recipients may disclose or publicise anti-avoidance notices. We follow the logic of this clause, as one would want to prevent people who receive a notice from tipping off the promoters or specified persons being investigated. However, what we would not want is for recipients of a notice, who often will not be the main targets of HMRC, to be prevented from accessing professional or legal advice.”
“Overall, these are important deterrents and strong sanctions to ensure that bad actors pay the price. At the same time, they seem to be fairly balanced with the safeguards in clauses 197 to 206. We are therefore generally content with the drive and execution of these clauses.”
“I thank the Minister for explaining what the clauses are all about. We are slightly worried about what they do not set out, which is the threshold for HMRC to pursue a criminal conviction that would result in a prison sentence. Prison sentences should be reserved for the most serious breaches. I would be grateful if the Minister could provide more clarity in any correspondence that may be published. Clauses 191 to 196 set out the civil sanctions for non-compliance with an anti-avoidance information notice. As we heard, the sanctions will consistently apply a fine of up to £5,000 for a breach, as well as daily penalties for continued breaches. Additionally, clause 196 allows for the daily penalty to be increased if the person continues to offend for more than 30 days since the original notice.”
“The clauses work well together, and there is widespread agreement from those in industry about the positivity of the changes. We certainly agree with industry that these are good measures. Question put and agreed to. Clause 206 accordingly ordered to stand part of the Bill. Clauses 207 to 212 ordered to stand part of the Bill. Clause 213 Penalties for non-disclosure of tax avoidance schemes Question proposed, That the clause stand part of the Bill.”
“Clauses 206 to 212 introduce measures to address the involvement of some legal professionals in tax avoidance schemes, and I reassure the Minister that we support what the clauses look to achieve. Clause 206 allows lawyers to make a formal declaration of material protected by legal professional privilege that may support HMRC’s investigations. That means that the vast majority of lawyers will be able to flag concerns and demonstrate compliance with HMRC without breaking that privilege. At the same time, clause 207 introduces a penalty of £10,000 for a lawyer who makes a deliberately false declaration in an effort to cover their involvement in the promotion or marketing of tax avoidance, although I cannot imagine a situation where a lawyer would do anything that was not 100% honest.”
“If not, it would be useful to understand how HMRC proposes to ensure that mistakes are not made in decision making and whether it intends to publish any corresponding guidance for businesses and interested parties.”
“We recognise that, in this instance, the terminology follows European Court of Justice and High Court judgments that established the Kittel principle, which means that a business that “should have known” is aiding the perpetrators of fraud and is effectively an accomplice. However, there is no concrete definition of this term, and by extension there is a lack of clarity for innocent parties that make genuine errors. Getting this wrong could result in significant cash-flow issues, contract terminations and reputational damage for subcontractors, so we need to be sure the provision is airtight. Will the Minister commit to looking at this point again and providing the clarity that industry is asking for?”
“As with earlier clauses, we agree with these measures, which will help to streamline the process and allow HMRC to quickly cancel benefits such as gross payment status where there is deliberate non-compliance or fraud. That will allow the authorities to stay ahead of bad actors and ultimately protect taxpayers’ money. We broadly welcome the thrust of these measures. I have one or two questions. There is a lack of clarity that needs addressing, and I would welcome the Minister’s comments on it. The clauses allow HMRC to remove gross payment status from parties that “knew or should have known” of inaccuracies with the CIS that were being carried out by another party. In the same vein as my earlier comments on the terminology “likely to be” marketed, the words “should have known” extend the liability beyond deliberate fraud.”
“Slightly more controversially, it also resulted in wealth managers potentially having unlimited liability, to the end of their life, if they messed up, which was a bit of a problem. A third measure was about the compensation of wealth managers. At the time, wealth managers were paid a commission by the providers of the products they sold. That was changed to a fee-based system, where somebody seeking the services of a wealth manager would not potentially be ripped off as a result of commissions being paid, and we would therefore have a level playing field.”
“Welcome to your position, Mrs Harris. I hope you will indulge me a little if I go back into some of the history of this place. I have been here for 15 years, which I think is greater than the collective experience of most members of this Committee, although that is not something to brag about. However, we sometimes forget the lessons from history. Back in 2011 and 2012, when I was a newly elected MP, we started looking at the retail distribution review. The Financial Conduct Authority felt strongly that people needed better advice from their wealth managers, and the retail distribution review was brought in to do a number of different things. One of the things the review did was require wealth managers to have proper qualifications, which is not an unreasonable proposition.”
“The Minister is being very indulgent. The Liberal Democrats and I are probably as one on this point. The reason it is incredibly important that we get this right, and the reason I brought up the retail distribution review, is that there can be unintended consequences. We should remind ourselves that the Bill is 539 pages long. The tax code is 21,000 pages long—10 million words. More importantly, the tax code costs us £15.3 billion a year to comply with—it is really complicated. We already have a very complicated system, and if we do anything that inadvertently makes it more complicated—if we get this wrong—it will be really bad news for the whole of our economy. We must not do something that inadvertently—I was going to say, screws it up—”
“However, given the gravitas of the orders, clarity is needed to ensure they are issued in a reasonable manner. There should also be a mechanism for an ineligibility order to be cancelled if an appeal or a review finds in favour of the tax adviser. Finally, we agree with the ICAEW. The suspension or ineligibility orders should only apply once an order is final. I am sure the Minister would agree that it would be unfair on a business to notify clients of an order to only then have it withdrawn. The orders are serious sanctions, so the initial reputational damage could genuinely put a tax adviser out of business even if they have not done anything wrong. I would be grateful for the Minister’s reassurance that that is something they will reasonably consider.”
“The clauses focus on compliance notices and ineligibility orders. Again, we support the thrust of the clauses, but the Institute of Chartered Accountants in England and Wales has asked for further clarity in some areas. First, clause 230(3) makes provisions for an adviser to be notified of a compliance notice. However, it does not impose a time limit and could lead to delays. Given tax advisers and relevant individuals are being subject to strict timeframes, with some exceptions or extensions, should HMRC not have to abide by similar rules and timeframes? Secondly, clauses 233 and 234 are specifically on ineligibility orders being issued to tax advisers and relevant individuals. Those are important as they will help to temporarily or permanently remove an entity from being officially registered.”
“With that in mind, will the Minister commit to taking this away, and potentially removing paragraph 6(7)? The other issue comes back to the temporary relief from suspension, as previously discussed. Under schedule 20, the decision to grant temporary relief rests with an individual authorised HMRC officer, who can be the same officer who issued the suspension. It goes further: the schedule stipulates that the officer must take into account the prospect of the review or appeal succeeding. Could that not create conflicts of interest and be fundamentally unfair to the applicant? Would it be better practice to mandate that either another authorised officer or the commissioners make the decision to grant temporary relief from the suspension? I would be grateful if the Minister could provide some clarity.”
“Clause 241 and schedule 20 provide more details about the review and appeals process that HMRC will operate. They also confirm that HMRC must offer a review where there is an opportunity for a person to appeal a decision. The clarity is welcome, but there are still some issues that the Government need to consider further. First, paragraph 6 of the schedule provides that a statutory review automatically concludes in HMRC’s favour if it simply does not deal with the review request. As the Chartered Institute of Taxation puts it, that “seems particularly inappropriate here, given an appeal is one of the few ways that a firm can challenge this regulatory decision (in which HMRC has a conflict of interest).” We agree that it is unfair for HMRC to find in its own favour because it failed to carry out something in a timely manner.”
“Would the Minister take that on board and have a think about how we can make sure that the process is efficient and works well?”
“This is all pretty uncontroversial, but there is one concern with clause 246, which states that the commencement date will be May this year. Although they have pushed this back by a month, are the Government not concerned that this is an insufficient length of time for tax advisers to register? From representations we have had from the industry, they are very concerned that the timeframe is too short. Indeed, is HMRC fully equipped to take on this extra workload? I expect that the Minister will say that advisers can do it all online, but I am slightly worried that things like that do not always work. There is a real concern in the advice industry of the widespread unintended effect that may come out of these measures. It is important that we get this right and that people have time to prepare.”
“Could I ask for a little clarity on that? Does that mean that there will be a list, and that an adviser will get three months from the point at which they are published on the list? Can they elect when to go on to that list? I am not quite clear what the Minister meant.”
“There are a number of other issues about the way this is working. I will not trouble the Committee with them now, but we may follow up with a letter to the to the Minister about where parts of the Bill seem to be spreading into slightly negative territory.”
“As the Chartered Institute of Taxation points out, the objective of the Government’s policy is to target deliberate behaviour. This change seems inadvertently to miss that objective entirely. Frankly, it seems to be the wrong move, and there is significant strength of feeling in the industry that the terminology should revert to its original wording. Can the Minister provide more detail on the decision to change the wording? What representations have the Government received from the industry about it? Will he also please commit to engaging further with industry stakeholders before Report stage, and to making the necessary changes to accomplish the well-intentioned aim of the policy? I have had other representations from groups such as the Institute of Chartered Accountants in England and Wales about related issues.”
“These clauses are wide and important, but they have also drawn significant criticism. The Government have decided to amend “dishonest conduct” rules to “sanctionable conduct” rules in schedule 21. That may seem like a minor change, but it changes the current high threshold of dishonesty to one that is lower and potentially ambiguous. The Institute of Chartered Accountants in England and Wales has described the definition of “sanctionable conduct” as “exceptionally broad;…based on inferred intention; and…not limited to unethical, unprofessional or deliberately incorrect behaviour.” Couple that with significant increases in penalties for conduct in scope, and it is unsurprising that the change causes a fair amount of concern in the industry.”
“The Chancellor of the Exchequer came along about a year ago and proudly said that she had managed to repair the public finances, only for us to discover a year later that in fact the public finances had not been sorted out and we had to see huge amounts more taxation come in. To remove the opportunity for the OBR to have a look at the public finances is a bad idea and we do not support it.”
“That was sterling support for a terrible idea. The Office for Budget Responsibility was brought in back in 2010 to try to keep an eye on what had been going on through the financial crisis, the big problems as a result of the financial crash and, interestingly, the austerity measures brought in by Chancellor Alistair Darling before the 2010 general election, which were necessary to carry on and to sort out the public finances. It is really important that the Government are held to account, that Members of this House do so, and that they do so with as much information as they can possibly have. The Office for Budget Responsibility is there to mark the homework of the Government. To reduce that homework marking to just once a year—I appreciate that there are two events, but only measuring fiscal ability once a year—is not a good idea.”
“The broad thrust of the measure is perfectly reasonable. As we go into a more digital world, it is perfectly acceptable that people should be required to interact with HMRC online. The only problem is that not everybody is as computer literate, so what measures will be in place to support people if they are genuinely struggling? That aside, we are in favour of the measure.”
“Are the Government not going a bit too far? I remind them that this is about regular taxpayers, and this penalty could catch out people who are more vulnerable or less financially literate. Can the Minister commit to reviewing whether this £1,000 fine is too high and, indeed, whether we should be bringing it in? We are completely behind the thrust of the clauses, but this penalty seems disproportionate. There is no fine for not updating a postal address, so why would there be one for not updating an email address?”
“This is all fairly straightforward. We are delighted that, since coming to power 18 months ago, the Government have decided that they are going to follow on with the great initiatives of the last Government, and I thank the Minister for so enthusiastically celebrating our achievements. However, there is one bit that we are slightly worried about. Clause 258 will require individual users of HMRC online services to provide and keep up to date their digital contact details. That is a perfectly reasonable request, but to enforce it, people can be subject to financial penalties of up to £1,000. As the Association of Taxation Technicians has said, the proposed £1,000 penalty is “unprecedented and disproportionate”. Much more importantly, there is no comparable HMRC penalty for failing to update a postal address or traditional form of contact.”
“It would be helpful if the Minister explained a more detail what, specifically, the clauses mean by “cryptoasset”. Standing back from the minute detail of what a cryptoasset is, as opposed to what a stablecoin is, the general thrust—participation in the wider reporting of what is going on with this stuff—is probably a good idea. We need to understand how it works, get things proportionate and not become over-regulated, because if we become over-regulated we become uncompetitive. There are a number of issues that cause me concern, so I will be grateful if the Minister can offer some explanations now, and then we can have more discussions when we meet in a week or two. If we go down the wrong track, it could put us a long way behind our international competitors.”
“It can behave like a currency, or it can behave like a share, whereby it has its own intrinsic value and people can buy it with a view to selling it when it goes up in price. Similarly, people can use it, as we saw in the case of Tesla: Elon Musk was prepared to take bitcoin as payment for Tesla cars, although not for very long. However, it is not the same as a fiat currency and is not the same as a tokenised pound or stablecoin; those so-called cryptoassets act as part of a payment system. This is where we find ourselves getting into a potentially complicated area. We may be making legislation without necessarily understanding the difference between bitcoin, dogecoin and ethereum, which are tradeable assets, and a mechanism that enhances the payment system.”
“The clauses follow a recent Delegated Legislation Committee debate that the Minister and I had, as a result of which we are going to get together with some members of the industry to talk about the confusion on this issue. One thing that worries me about the clauses is that they fail to differentiate between a cryptoasset and a stablecoin or tokenised currency. It is important to recognise that those are two different things. As I understand it, HMRC will take reporting on interest paid on deposit accounts, for example, so that it can understand what is going on in the economy and in individuals’ accounts. However, a bitcoin is not a currency; it is a tradeable asset.”
“It is great to hear the Minister talking about making the City of London a pre-eminent place in which to grow and list companies, and this is a very welcome measure. However, if he accepts that stamp duty is what has been holding back the listing of shares, why do the Government not go the whole hog and get rid of stamp duty altogether, thereby making the City of London comparable with pretty much every other major developed stock market in the world?”
“The Minister talks about value for money and the cost, but the alternative is that there will be no listings, so it does not cost anything because this is revenue that the Government would not otherwise have. If they levy this stamp duty, people will not list—they will go to other markets. If they remove it, people will list. There is not actually any change in the revenue to the Government. I do not understand why they cannot extend it. It is not lost revenue because it never would have been generated in the first place.”
“My hon. Friend is making an incredibly good point about the inflationary effect of these taxes. He has mentioned houses, and we know that the Bank of England is charged with using monetary policy to keep inflation under control. The direct effect of this measure could be an increase in interest rates, and therefore an increase in the cost of mortgages. Does he think that the Government would be happy with that?”
“However, I urge the Minister to talk to all his colleagues about this matter, and to reassure the Committee that these measures are not about having our own version of that policy, and about increasing tariffs in order to have a trade war, but about having a set of relevant measures that mean that the Government can act in defence to what could be a hostile attack on trade.”
“The Smoot-Hawley Tariff Act of 1930, introduced by President Hoover, was designed by Senator Smoot and Representative Hawley to try to help American businesses and American farmers by increasing tariffs. The net result was a global trade war that resulted in a 65% drop in global trade. That is what happens when people muck around with tariffs; that is where the damage can come. I completely appreciate that these measures are, I suspect, a very necessary response to what is happening on the other side of the Atlantic, where there is a very unpredictable trade policy, so it is the right thing to do.”
“It seemed that the person who introduced those tariffs had completely failed to observe that 95% of an iPhone is made in Vietnam and China, as a result of which the tariffs increased the price of iPhones for the American people, which was completely against the intentions of that Government. Tariffs are really bad, and we have been trying to get them down for an awfully long time. However, I completely understand the point that the Government are trying to make with the Trade Remedies Authority and the toolkit that the Government need in order to respond to certain issues. It is vital that we have the ability to move on things such as tariffs, and I suspect that the Minister is 100% aligned with me on this, but I stress that we have lessons from history, from when such actions have gone hideously wrong.”
“Before I go into the details of the clause, and before the Committee discusses the subsequent two clauses, it is worth getting on record how much the Opposition object to trade wars and increasing tariffs. Such tariffs harm the country that introduces them. Take what has been going on in America as an example. On its “liberation day”—as I think its Government called it—it introduced very heavy tariffs, including on something as simple as the iPhone, which the American people would consider to be one of the greatest inventions and greatest products they have ever had.”
“Fundamentally, though, on both these clauses, we must ensure that these important decisions are made with technical rigour and on the evidence. It is incredibly important that they are not driven solely by political whim. I ask the Minister for an assurance on that point.”
“However, clause 108 requires clarity on the conditions that enable the Secretary of State to direct the Trade Remedies Authority to initiate an investigation. I have two points on this. First, on the requirement of evidence of increased quantities in a good, clause 108 does not introduce any parameters or a threshold that would distinguish a legitimate increase in quantity of goods from an increase that warrants investigation. Secondly, there is no definition or guidance on what constitutes “serious injury”; the clause does not make clear what serious injury means. Without the clarification, the clause grants the Secretary of State substantial discretion in determining whether those conditions have been met.”
“It is quite a technical question, and if he feels the urge to write back, that might save him the trouble of getting into a lot of technical detail. We are supportive of the thrust of amendments 44 and 45, tabled by the hon. Member for Maidenhead. It is important for decision makers to be accountable to Parliament for their decisions, whether that is the Secretary of State or the Trade Remedies Authority. I suspect that these amendments will be voted down, so could the Minister help the Committee understand what safeguards are in place to address the concerns outlined by the hon. Member for Maidenhead? Clause 108 gives the Secretary of State the power to direct the Trade Remedies Authority to initiate a safeguarding investigation. It is important that the UK has the necessary defensive measures where there is injury to UK industries.”
“However, injury margins can often exceed dumping and subsidy margins due to their accurate reflection of the true economic harm inflicted on UK industries. Each time, they have been overridden due to the lesser duty rules, and the removal of this rule could have given the Government the opportunity to apply a regime that reflects injury margins better in dumping and subsidy investigations. That would not only protect UK industries but send a clear message to those who engage in these abhorrent trade practices that this will not be tolerated and will be met with serious repercussions. I would be grateful if the Minister could expand on the Government’s rationale not to cut duties at the injury margin.”
“According to the OECD, Chinese steel imports surged to a record level of 118 million tonnes in 2024. Interestingly, there are different points of view on this. For those in the building industry, the idea of having an awful lot of cheap steel coming into the country is not that unattractive, but it would affect our domestic industries. How the Government curb dumping and subsidisation must be accompanied by, at least in part, a deterrent effect. That is crucial for investigations that implicate large and powerful countries. Clause 107 removes the opportunity to implement any deterrent effect because it caps duties imposed on the dumping margin or subsidy amount, not at the injury margin. I acknowledge that this is in line with World Trade Organisation rules.”
“Clause 107 gives the Secretary of State the power to direct the Trade Remedies Authority to initiate a dumping or subsidisation investigation. We support measures that tackle any unfair trading practices, including dumping and subsidisation. We are also supportive of measures that bring power back into the hands of Secretaries of State and Ministers. That is especially important when it comes to practices that could harm our industries and our constituents. One example of that is the steel industry. Back in 2016, it was reported that Tata Steel had suffered more than 1,000 job losses, including 750 from Port Talbot alone. Tata stated that the reason for this was the flooding of cheap imports, particularly from China. This will continue to be a problem.”
“However, while I agree that the ports must be able to stand on their own feet, clause 109 risks the ports’ introducing additional import and export charges being applied to every lorry and trailer that passes through. The magnitude of the price increases could be substantial for businesses, which may end up passing on the additional costs to consumers—not to mention that they would be in addition to the port inventory charges that the port of Dover implemented from 1 January this year. I recommend that the Government assess the impact that the legislative changes in clause 109 would have on these ports, the businesses and hauliers that rely on them and consumers, who will have to pay a higher price. We get the principle of the clause, but we are concerned about whether there are any adverse knock-on effects on trade through the ports.”
“Clause 109 shifts the responsibility for the remaining two inland border facilities from the Government to the port authorities. The switching of inland border facilities services and operations to a commercial basis was something that the last Government were exploring. However, we query whether clause 109 goes a little too far. It would require the ports to prepare to take on the additional responsibility of providing equivalent infrastructure. We appreciate why the ports received the additional Government assistance in the first place, especially considering the far-reaching effects that any disruption in Dover could have.”
“Has he considered the potential impact on the UK’s competitiveness, particularly mid-sized firms that may now face substantially higher costs?”