HC Deb 24 May 1973 vol 857 cc649-51
12. Mr. William Hamilton

asked the Chancellor of the Exchequer if he will take additional steps to eliminate or reduce tax evasion by the transfer of assets to territories outside the sterling area.

Mr. Hamilton

On a point of order, Mr. Speaker. I think that the Treasury has been informed that the word "outside" in the Question should be "inside". That would include the Cayman Islands.

Mr. Barber

The Inland Revenue, as a matter of course, keeps under review action necessary to counter tax evasion devices.

Mr. Hamilton

Will the right hon. Gentleman make it clear that the Lonrho inquiry will cover the activities of the Yeoman Investment Company in the Bahamas, the Swiss subsidiary called Borma, and the nine Drayton Corporation Trusts of which Mr. Angus Ogilvy is the chairman? Will the right hon. Gentleman say what the constitutional position will be if the inspectors seek to obtain information from a member of the Royal Family who is heavily implicated in this rather squalid affair?

Mr. Barber

My right hon. and learned Friend the Minister for Trade and Consumer Affairs has already announced that an inquiry is to take place under Section 165 of the Companies Act 1948. We must await the outcome of that inquiry. I shall draw to the attention of my right hon. Friend the point made by the hon. Member for Fife, West (Mr. William Hamilton).

Mr. Peter Rees

Will my right hon. Friend make it quite clear that references to the Cayman Islands by the right hon. Gentleman the Leader of the Opposition are a malodorous red herring, and that the existing law is adequate to deal with the taxation of directors and employees in such circumstances?

Mr. Barber

As I understand the position, the place of payment of remuneration will not affect a person's liability to United Kingdom tax unless the whole of the duties of the employment are performed abroad. As I think is known, only amounts received or remitted here during the currency of the employment are then taxable. In any case, exchange control consent would now be required to retain funds in the Cayman Islands. That would not be given unless a need were established.

Mr. Joel Barnett

Some people are finding the remarks of the Chancellor of the Exchequer and the Prime Minister about our capitalist society a little strange. Will the right hon. Gentleman tell us what level of tax avoidance would be pleasant and acceptable?

Mr. Barber

I have already made it clear that in terms of tax avoidance and evasion the Inland Revenue, as a matter of course, will make a full investigation into the possible use of artifical devices to minimise tax liability. I have said that I am considering whether further action is necessary.