Iran
(Urgent Question): To ask the Secretary of State for the Foreign, Development and Commonwealth Office if she will make a statement regarding the situation on Iran.
Showing every spoken contribution, including 5,731 under 12 words. Hide short remarks
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Iran
The brutal crackdown on brave Iranians fighting for their basic rights and freedoms continues. The reports are shocking. We have now seen that tens of thousands have been killed and hundreds of thousands injured. Some are even saying that 30,000 people have died. These are warlike casualty rates, yet the condemnation and response are weak. What are the British Government doing, with our allies, to neutralise the regime’s tools of repression? The Government have announced new sanctions—the Minister has spoken about that—but what is being done to crack down on the sanctions evasion that is fuelling the Iranian regime’s repression, including in oil sales and cryptocurrency usage? What steps are being taken to weaken the regime’s terrorist proxies? Are the Government tracking the regime’s illegal funding sources to ensure that UK financial systems and institutions are not facilitating or hosting funds that are being used to target Iranian citizens in Britain with hostile attacks? The EU has chosen to proscribe the IRGC. What is the Government’s response? The Jonathan Hall review concluded nearly nine months ago, so when will emergency and essential measures to take action against the IRGC come to Parliament? We cannot wait, and the Conservatives will support emergency legislation. The build-up of US naval and air force assets in the middle east has been well documented and reported, and it has prompted some reported contacts between the US and Iran. Will the Minister say what discussions have been held with the US Government about their intentions? Is the UK involved in any contacts between the US and Iran? What plans is the Minister making for British assets and the protection of personnel and British nationals in the region should the US decide to strike? Is there a scenario in which the UK might be involved in potential action? How will Ministers ensure that they are at the table, and what planning and co-operation are under way to assess any commercial disruption within the region should action materialise? This is not the time to be silent. Britain must stand up for the Iranian people and confront this vile, despotic regime with strength and resolve.
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Town and City Centre Safety
It is a pleasure to serve under your chairmanship, Mr Dowd. I thank the hon. Member for Derby South (Baggy Shanker) for securing this important debate. The Government promised to strengthen neighbourhood policing. We have heard many well-intentioned but sadly empty words from Labour Members as their actions in London fall far short of the mark. Nowhere did they tell Londoners during the mayoral or general elections that they would cut £260 million from London’s police service, and yet that is exactly what they are doing. Bromley might be one of the safest boroughs in London, but our town centres and villages still face acute policing challenges, from antisocial behaviour and shoplifting to car theft and burglary. We are simply not receiving the policing resources our community needs to tackle the issues. Together with the £22 million funding cut for Bromley council, my constituents in Bromley and Biggin Hill are being unfairly punished by this callous Government. As part of Mayor Khan’s sweeping cuts to the Metropolitan police, he is closing all but two of the 24-hour police counters across London. In doing so, he is breaking his manifesto promise to retain at least one 24-hour front counter in each borough—just as, incidentally, he is breaking his promise to protect the green belt. Bromley, despite being a major town centre with a busy nightlife, is one of the areas set to lose its round-the-clock police station service. On the evening of 23 March, lights will be turned off at Bromley’s police station. It will be a huge blow for public safety, further undermining confidence in the Met and hindering our brave police officers from doing what they do best, which is keeping our people safe. Regardless of the outcome of any changes, I will keep fighting this closure all the way. If we do not stand up and say, “Enough is enough,” Sadiq Khan will break more manifesto promises and come back for even bigger cuts to policing in Bromley. It is clear that our town and city centres are not safe under Labour.
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Taxation: Small and Medium-sized Enterprises
Last week I was lucky enough to host a roundtable with some SMEs from Bromley, including the excellent Martin from the Crown and Anchor. They said to me that this Government’s policies, including the jobs tax, are restricting their ability to grow and to hire young people. Would my hon. Friend agree that abolishing business rates would give small businesses the boost that they need to thrive?
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Taxation: Small and Medium-sized Enterprises
I know that my hon. Friend is talking specifically about businesses and enterprises, but on that last point, the decisions taken by the Government are also impacting charitable institutions. Indeed, I have met some in my constituency of Bromley and Biggin Hill that are having to let charitable staff go, which is having a further impact on the NHS.
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Changes to Jury Trials
Thank you, Mr Speaker. I have been reading the Labour party manifesto, but without much luck. Can the Justice Secretary tell the House on which page the promise to restrict jury trials appears? Was it on the same page as digital IDs and all the tax rises?
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Changes to Jury Trials
Not waving but drowning. Forty of the right hon. Member’s colleagues—the number is rising—say that restricting jury trials is “madness”. He says that he will not listen to them, judges, lawyers or the victims of crime, so perhaps he will listen to these esteemed voices. “Jury trials will always be a cornerstone of British justice.”—[Official Report, 27 November 2025; Vol. 776, c. 517.] That was the Minister for Courts and Legal Services. “There must be a right of trial by jury in all criminal cases”—that was the Sentencing Minister. “Criminal trials without juries are a bad idea. You do not fix the backlog with trials that are…perceived as unfair.” That was Justice Secretary himself. If even he knows that this is a bad idea, how long must we wait for the 14th U-turn from this miserable Government?
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Victim Support Services: Funding
The Prime Minister said that passing the Hillsborough law would be one of his first acts in office, but last month the Government arranged to bring the Bill to the House for its remaining stages twice, only to pull it at the last moment on both occasions. The Prime Minister has made a promise to the Hillsborough law campaigners that he cannot keep without breaking the assurances that he gave to the intelligence agencies. It is another fine mess from Mr Forensic. Can the Minister guarantee that the Bill will complete its passage through both Houses of Parliament before the end of this Session—yes or no?
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Separation Centres Review
I thank the Justice Secretary for advance sight of his statement, and I welcome the publication of this important review. The Government commissioned Jonathan Hall to produce his report following the very violent attack on three prison officers last April by Hashem Abedi—the man behind the Manchester arena atrocity. I pay tribute to the vital work done by the brave men and women of the Prison Service. We should be frank about why separation centres are necessary. They house the most dangerous and radicalised terrorist offenders in the country. Charlie Taylor wrote in 2022 following an inspection: “The centres were designed to be used for prisoners from any political or religious viewpoint, but so far, they have only been used for Muslim men”. That should not be a surprise, because Islamist extremism is by far the gravest threat that we face, and attempts to pretend otherwise are not only cowardly but enormously counterproductive. MI5 says that 75% of its counter-terrorism work is focused on Islamists, and 61% of terrorist prisoners are Islamists, yet the figures show that only 10% of Prevent referrals are Islamists. The Justice Secretary was clear about the Islamist threat, but even then he felt the need to caveat his comments by saying that extremism in the prison estate takes many forms. Of course it does, but time after time, we hear people in positions of authority refer to acts of terrorism, antisemitic violence, and the poison of intolerance and hatred, without the bravery or honesty to name the ideology behind it all. Its name is Islamism, and it has no place in our country, but if we are afraid to be honest about it, we will never defeat it. Mr Hall has said that in prisons, “The impact of Islamist groups has been underappreciated for too long by the authorities.” He has reported that Islamist gangs in prisons are too often viewed “purely through the lens of good order and discipline”, and governors believe that they “can sometimes provide a degree of calm and stability”. He has revealed that “prison officers sometimes appeal to the wing ‘emir’ for their assistance in maintaining good order.” When will prison inspectors be directed to investigate Islamist extremism? Will the Justice Secretary ensure that known problems, such as gang-enforced sharia courts in prisons, are investigated and reported on? Will he publish information on the number of religiously and ideologically motivated incidents in prisons? The problems for prisons caused by our human rights laws are well documented. The Justice Secretary said that he would consider whether new laws are needed to limit litigation based on article 8 of the European convention on human rights. Making full use of the Sir Humphrey lexicon, he said that he was exploring the full range of options, but promised nothing concrete, and—as is obligatory in this Government of human rights lawyers—he pledged fealty to the European convention. Let us consider the recent case of Sahayb Abu, an ISIS terrorist who planned to “shoot up a crowd” of civilians and is serving a life sentence. He was held in a separation centre and made subject to greater restrictions following the Abedi attack. He used article 3 of the convention—which the Justice Secretary did not mention—to argue successfully that his prison, HMP Woodhill, did not take into account his mental health. Will the Justice Secretary tell us how many prisoners are in the process of suing the Government, under the prison rules and European convention on human rights, to escape separation centres and close-supervision centres? What is he doing to prevent them from being awarded compensation? When will he decide whether he needs to legislate to limit the application of article 8? What will he do about article 3 claims like the one made by Sahayb Abu? Should not the Justice Secretary be open about the reality of his commitment to the ECHR, which he repeated today? It means rights for criminals and terrorists like Sahayb Abu and Hashem Abedi, but danger for prison officers and the wider public. The Justice Secretary can say what he likes about legislating—perhaps, after careful consideration, and in the fullness of time—to avoid litigation based on article 8, but the simple truth is that, as long as we remain in the ECHR, he cannot guarantee a thing. And that is why we must leave.
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Separation Centres Review
Order. Before I call the Opposition spokesperson and other Members, I note that the Hashem Abedi case, to which passing reference was made, is sub judice. Members should avoid reference to the specifics of such cases.
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Separation Centres Review
I call the Liberal Democrat spokesperson.
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Separation Centres Review
I call the Father of the House.
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Point of Order
I thank the hon. Member for giving notice of that point of order. I have not received any notice that any Minister intends to make a statement on this matter. However, Ministers on the Front Bench will have heard the hon. Member’s point of order and will no doubt pass it on.
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Universal Credit (Removal of Two Child Limit) Bill
The reasoned amendment on the Order Paper has not been selected.
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Universal Credit (Removal of Two Child Limit) Bill
Order. Before the Secretary of State responds, let me say that there are many colleagues in the Chamber and I can understand how passionate this debate is, but let us try to keep the noise down when colleagues are contributing.
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Universal Credit (Removal of Two Child Limit) Bill
I call the shadow Secretary of State.
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Universal Credit (Removal of Two Child Limit) Bill
I call the Chair of the Work and Pensions Committee.
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Universal Credit (Removal of Two Child Limit) Bill
Order. As so many Members wish to contribute, Back Benchers will be on a speaking limit, which will start at five and a half minutes. I call the Liberal Democrat spokesperson.
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Universal Credit (Removal of Two Child Limit) Bill
Order. “You”, Mr Slinger—I have mentioned this to you so many times. Let us start again.
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Topical Questions
T7. It has been reported that lawyers—some of whom now sit in this House and in the other place—have relied on the European convention on human rights to support the prosecution of patriotic Brits who fought for their country. Does the Secretary of State agree that this is yet another example of activist lawyers and unaccountable judges in Strasbourg shamefully pursuing veterans who were doing their duty, and will he, like the Conservatives, commit to withdrawing from the ECHR?
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Prison Estate: Safety
10. What steps he is taking to improve the safety of the prison estate.
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Prison Estate: Safety
We know that drugs on the prison estate is a perennial problem when it comes to the safety of officers and other prisoners. Governments of all colours have been trying to tackle that for some time. The situation is particularly acute in the open prison estate, due to the different resourcing and the different layout of those prisons. In some places, we have more than 40% of prisoners failing drug tests on arrival in the open estate. Will the Secretary of State consider a policy that says, “If you fail a drug test on arrival, you will be sent straight back to the closed prison you came from”?
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Town and City Centre Safety
It is a pleasure to serve under your chairmanship, Mr Dowd. I thank the hon. Member for Derby South (Baggy Shanker) for securing this important debate. Town and city centres are the lifeblood of our local communities. They are crucial for people, local businesses and our economy, yet under this Labour Government it increasingly feels as though our town and city centres are being not supported but attacked—attacked by a jobs tax that raises the cost of employing people, by surging business rates that punish employers and enterprise, and by relentless pressure on pubs and small businesses, the very places that make our high streets sociable, welcoming and safe. The result is plain to see: businesses are closing. And when businesses are closing, confidence drains away. Thriving town centres are not just about economics; they are about safety. Communities with busy, successful high streets are more likely to report crime, look out for one another and defend what they value. That brings me—
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Town and City Centre Safety
That brings me to Stockton, which has a great high street and incredible local businesses. I always encourage people to support Stockton, but I would be negligent in my duty if I did not acknowledge the challenges it faces—challenges that did not arrive overnight. Over decades, Stockton’s Labour council has allowed the town centre to decline and become home to unacceptable levels of crime and antisocial behaviour. When disorder grew, enforcement weakened. When problems became visible, excuses multiplied. The council’s priorities tell their own story. Instead of employing more civic enforcement officers or street wardens—the people who provide visible reassurance—the council has expanded layers of management on six-figure salaries. It has recently emerged that Stockton-on-Tees borough council spent £15.8 million on recruitment consultants in just three years. Money that could have gone into keeping the town centre safe was instead swallowed up by consultants and questionable spending decisions. Councils have a duty to spend public money wisely, and in Stockton that duty has too often been neglected. At the same time, instead of using all the powers available through public space protection orders to clamp down on antisocial behaviour, the council’s soft approach has allowed far too much of it to go unchallenged. Worse still, Stockton’s Labour council volunteered itself as an asylum dispersal authority, taking on a completely disproportionate number of asylum seekers. For many years, Stockton has had one of the highest ratios of asylum seekers to residents in the entire country. Those asylum seekers are largely housed near the town centre, placing pressure on accommodation, public services and integration, and leaving large numbers of lone men congregating in the town centre, causing understandable concern for residents and businesses alike. The situation has been compounded by the council’s permissive approach to housing. It has allowed large numbers of houses in multiple occupation, bedsits and bail accommodation to cluster around the town centre. The result is predictable: people stop visiting, businesses close and crime goes unreported. That creates a doom loop, and Labour councils across the country have perfected it. What we now see nationally is Stockton scaled up. Since the Labour Government came to power, there are 1,318 fewer police officers on our streets and more than 3,000 fewer people working in policing overall. That is not an accident: it is a choice. Police chiefs warn of a funding shortfall of £500 million. In my local force, the Labour police and crime commissioner says there is a £2.4 million gap—the equivalent of 40 police officers. Even when offenders are caught, punishment is increasingly optional. Labour’s early release policies mean that criminals are back on the streets sooner—sometimes within weeks—so shopkeepers see the same faces returning, residents see the same behaviour repeated, and police officers see their work unravelled by decisions taken far from their communities. The consequences are clear: shoplifting is rising and the robbery of business property has surged. The Government tell us that crime is under-reported; if that is true, it only strengthens the case for more police, not fewer. The Government point to measures in the Crime and Policing Bill, but targets mean little if officer numbers are falling. Warm words do not patrol streets. Conservatives believe that safety is not a luxury, but a foundation on which everything else depends. That is why we back our police. That is why we are committed to recruiting 10,000 more officers. That is why we support visible, proactive policing in the places that need it most. Before the Minister tells us once again that a strategy is in place, may I ask a very simple question? Will she commit today that no police force will lose yet more officers as a result of the Government’s next spending review, or should communities prepare for even fewer police on the streets? That leads me to a second, unavoidable question: does she expect communities to feel safer when there are fewer police, criminals are being released early and Labour councils refuse to use the powers they already have to tackle antisocial behaviour, or is managed decline now official Government policy? Fewer police, early release and unenforced laws are not unfortunate side effects; they are policy choices, and our town centres are paying the price.
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Topical Questions
T1. If he will make a statement on his departmental responsibilities.
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Topical Questions
Could I return the Secretary of State to the issue of jury trials? I have received an email from a constituent who is a practising barrister, who points to the issues, which have already been mentioned, of poor prisoner transport, the cap on sitting days and the condition of many courtrooms. Could the Secretary of State focus on delivering improvements in those areas, and abandon the proposals to limit jury trials?
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Iran
Thankfully, Iranian influence is in decline in the south Caucasus and central Asia, but one country in which it seems to be in the ascendancy is Georgia. Does the Minister share my concern about allegations that there are up to 13,000 Iranian companies registered in Georgia, with 700 registered to one small building in one small village? There is potential sanctions-busting and sanctions-evasion activity going on there. That money feeds into the Iranian regime and funds its malign and malevolent activity across the world. Will the Minister take that up with the Foreign Secretary, and investigate whether Iran is funding its regime by using Georgia as a back door to the Black sea?
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Finance (No. 2) Bill (Sixth sitting)
Clauses 156 to 162 will place a statutory ban on promoting tax avoidance arrangements that have no realistic prospect of success. The clauses also set out the civil and criminal penalties. The Opposition absolutely support the Government’s efforts to tackle tax avoidance and tax evasion, both of which are variations on a theme. It is important to remember exactly what they are. Tax planning is to be encouraged; tax evasion should lead to being sent to prison; and as for tax avoidance, we should try to persuade people not to use the letter of the law to avoid the spirit of the law in their tax planning. However, some concerns, which I hope the Minister can answer, have been raised with us about the clauses. Clauses 157 and 162 define what is meant by “promotion”, as well as other key definitions that are applicable to these clauses. Those definitions are welcome, but the Chartered Institute of Taxation has flagged concerns about the wording. For example, the clauses use the terms “marketed” and “likely to be” marketed but never define what they mean. The intention to prevent ineffective tax avoidance arrangements at source is noble, but “likely to be” marketed is too loose. What evidence would constitute an arrangement being classed as likely to be marketed? What evidence would an adviser need in order to show that advice was not likely to be marketed? Clarity is needed because the provision, if left unchanged, could accidentally catch normal tax advice. Will the Minister therefore commit to tightening up the wording of the clauses and providing specific details, either before Report or in any follow-up regulations? Secondly, how can the Government prove that someone is promoting arrangements that have “no realistic prospect” of success? Will it be for individual officers of His Majesty’s Revenue and Customs to determine, or will clarity be provided in the statutory instrument that will eventually follow? I ask because, as the Chartered Institute of Taxation points out, the term was not in the draft Finance Bill. Originally, the Government wanted to introduce a new criminal offence of failing to notify a tax avoidance arrangement under the rules on disclosure of tax avoidance schemes. We welcome the fact that the Government have consulted and, following the responses from industry, have decided to change tack. However, the new terminology of “no realistic prospect” of success was first raised only on 12 November last year. That was followed by a consultation that the industry has described as “very short, limited and confidential”. Will the Minister and HMRC therefore consider running a more open consultation?
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Finance (No. 2) Bill (Sixth sitting)
I wholeheartedly agree. The more we discuss it in public, the more the general public will realise that avoiding tax is a very bad thing. Anything that highlights that point is to be welcomed, so I strongly urge the Government to do the right thing so that we can make this prohibition work and protect advisers who may simply have made an error. Clause 159 lays out the civil penalties, including a financial penalty of up to £1 million if the prohibition is breached. Additionally, it sets out an individual fine of £5,000 that can be issued for each person who has participated in the arrangements. We agree with the Government’s aim of creating a deterrent, but given how steep the sanctions are, there is a concern that the 30-day window for making representations is not enough of a safeguard. At the moment, that is the only recourse: a person cannot make a formal appeal to the tax tribunal. Subsequent clauses, which the Committee will discuss later, include a “reasonable excuse” defence. Not having such a defence leaves open the possibility that the bad behaviour of one rogue actor will lead to the prosecution of the wider organisation. Will the Minister and her officials agree to take those points away and consider tabling a new clause on Report?
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Finance (No. 2) Bill (Sixth sitting)
I think we all agree with the sincerity of the intention, but the problem is that there is always a grey area at the boundary. The question is how we define that area so that we make certain that a legitimate person does not get wrongly drawn in, while a bad actor gets away with it.
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Finance (No. 2) Bill (Sixth sitting)
We would all agree that there is certainly a need to enhance HMRC’s ability to catch promoters of tax avoidance schemes. According to HMRC, there is currently a tax gap of about £500 million related to marketed avoidance schemes sold to individuals. HMRC has identified approximately 20 to 30 active promoters responsible for that. It seems that clauses 163 to 173 would theoretically affect only those engaging in highly risky schemes that HMRC has already disapproved of. We support the work of HMRC to protect the public from those groups and the overarching principles that drive these clauses but, on closer inspection, the scope of the proposals is wide. We have concerns that the proposals could inflict collateral damage on legitimate actors in the wider markets. Clause 163 outlines the process that HMRC undertakes to officially deem a person as a certified promoter. The big issue, however, is the difficulty of completing the process to officially certify what a promoter actually is. These promoters can be notoriously difficult to catch because some of them are based offshore and hide behind complex corporate structures, so although we support the purpose of clause 163, we are not entirely certain that it will achieve its intended result of tackling promoters offshore. Clause 164 has the same problem: it outlines how HMRC will require people who engage with promoters to disengage by issuing them with a promoter action notice. Will the Minister outline whether the Government are considering further steps to make the clauses enforceable? What steps are being taken with other countries to catch promoters not residing in but operating in the UK? That is an important point. Clause 165 is about the notification of a personal business that HMRC reasonably suspects is enabling a promoter. It is sensible to have that soft approach—to be followed, if necessary, by harder enforcement action later in the process. Our concern, however, is about the chilling effect that a preliminary notice might have on a legitimate actor. Once a recipient receives a preliminary notice, they may choose to pre-emptively sever ties with somebody whom HMRC has flagged as a suspected promoter, despite the fact that a preliminary notice is based on suspicion and is not an official conclusion. That means that preliminary notices will require a lower threshold of evidence in comparison with a promoter action notice, with no judicial oversight. In its technical consultation last year, UK Finance raised the fact that that could affect financial institutions as well. Clause 166 is similar. It specifies the information that an authorised HMRC officer and recipient of a preliminary notice or promoter action notice can disclose. Following the issuance of a notice, the investigation process keeps a suspected promoter completely unaware. That potential overreach could have chilling effects on people whom HMRC merely suspects. As clause 165 states, a person may sever ties with an entity being investigated even if that entity is only under suspicion. I encourage the Minister and officials to consider the safeguards that can protect legitimate actors from that prospect.
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Finance (No. 2) Bill (Sixth sitting)
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. 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. As the Association of Chartered Certified Accountants pointed out, the first-tier tribunal can take a significant amount of time. Therefore, is the Minister certain that HMRC has the resources to compensate for the increased workload? Will he consider implementing a suspension period provision? At the end of the day, if that drags on for too long, a provider could be put in financial jeopardy of business failure. Finally, clause 170 sets out when HMRC can report a recipient of a promoter action notice to a regulator, representative or trade body. I agree that regulators, and representative and trade bodies should be involved in the informative process, as their integrity and reputation could be at stake, too. However, the clause echoes similar concerns of mine regarding clauses 167 to 169. It means that reporting a recipient to the regulator in combination with publishing recipient details, as well as applying civil penalties, would all run concurrently before the recipient has even had a chance to reach a tribunal. Again, will the Minister outline what discussions have been had to ensure that there is not excessive duplication?
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Finance (No. 2) Bill (Sixth sitting)
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. 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. 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. 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.
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Finance (No. 2) Bill (Sixth sitting)
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. 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.
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Finance (No. 2) Bill (Sixth sitting)
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. 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.
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Finance (No. 2) Bill (Sixth sitting)
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. 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? 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.
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Finance (No. 2) Bill (Sixth sitting)
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. 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.
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Finance (No. 2) Bill (Sixth sitting)
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—
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Finance (No. 2) Bill (Sixth sitting)
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. 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.
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Finance (No. 2) Bill (Sixth sitting)
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. 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.