HC Deb 05 July 1973 vol 859 cc713-4
15. Mr. Douglas

asked the Chancellor of the Exchequer if he will make a statement on the number of companies trading in the United Kingdom which have their registered offices in the Channel Islands and the arrangements which are made for payments of United Kingdom tax by these companies in view of the EEC discussions on tax havens.

Mr. Patrick Jenkin

It is not the place of registration that is material for determining a company's liability to United Kingdom tax, but where it is resident. A United Kingdom resident company is liable to United Kingdom tax on its world profits whether registered in the Channel Islands or elsewhere. The number of such companies registered in the Channel Islands is not known.

Mr. Douglas

Does the right hon. Gentleman agree that many companies are registered in the Channel Islands for the purpose of tax evasion? Further, is he aware that the EEC has expressed disapproval of such registration? Will he consult his right hon. Friend the Secretary of State of the Department of Trade and Industry to see what reform of company law can take place to get disclosure of the companies in the Channel Islands?

Mr. Jenkin

I must repeat that mere registration in the Channel Islands does not enable United Kingdom companies to escape tax. If they continue to trade in the United Kingdom they remain liable to United Kingdom tax at least on the profits from their United Kingdom trade. The recent EEC directive, to which we subscribe, was aimed primarily at the position of companies in Luxembourg. Jersey and Guernsey have their own tax system and their own systems of law and administration. It would be entirely contrary to the normal constitutional relationship with the Channel Islands if we were to seek to intervene in their domestic affairs.

Mr. Peter Rees

Will my right hon. Friend confirm that there are already measures in force which enable the Revenue to collect tax from the agents or companies of Channel Island companies trading here, and that there is no call for any amendment to the law?

Mr. Jenkin

I take note of what my hon. and learned Friend has said.

Mr. Joel Barnet

Will the right hon. Gentleman in general ignore what his hon. and learned Friend has told him? Will he bear in mind that the Channel Islands are just one of many havens, and that the Opposition will move amendments to the Finance Bill on Tuesday which, if the Chancellor of the Exchequer will agree to alter the resolution, will allow the Prime Minister to do what he has always wanted, namely, to eliminate the horrid face of capitalism?

Mr. Jenkin

I have no doubt that we shall have the opportunity to discuss the general issues relating to this matter during what I understand is to be a wide-ranging debate on Tuesday.