HL Deb 15 April 1980 vol 408 cc114-8

2.40 p.m.


My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether, in view of the proposal to appoint additional inspectors to check social security abuses, which is estimated to save £50 million a year, it is proposed to take steps to deal with tax evasion which it is estimated would save at least 20 times that sum.

The MINISTER of STATE, TREASURY (Lord Cockfield)

My Lords, between them the two revenue departments employ a total staff of 105,000. These resources need to be deployed in the most effective manner and due priority is given to tackling tax evasion. Both revenue departments have in fact scored significant successes in this field in recent years. Thus, in the case of the Inland Revenue the amount recovered as a result of specific investigation work has increased nearly four-fold in the last three years; while in the case of the Customs and Excise undeclared VAT recovered as a result of control visits has almost doubled over the same period.


My Lords, I thank the noble Lord for that Answer. Could I ask him whether he recalls that on 4th December, in answer to a somewhat similar Question, he intimated that these matters are under constant review? Could he indicate the results of any recent review? Does he not agree that the amount of tax evasion is still so high as to be a matter of great concern that some people are not meeting their responsibilities while the great mass of citizens of this country have only one source of income?


My Lords, as I have indicated, the amounts recovered from investigations into tax evasion have shown a steady increase over the years. The number of staff employed on special investigation work in the Inland Revenue has also increased. There are at present five special investigation offices, and that number will be increased to six in the coming year. The number of staff employed in Customs and Excise in specialised investigation units has also shown an increase; and it is the policy of both departments to continue to deploy the maximum effort in this field, consistent with the overall level of their staffing.


My Lords, does not my noble friend the Minister agree that comparisons are odious, and that in this Question the comparison is particularly odious? Does the Minister further agree that, however deplorable tax evasion may be, the individual who is indulging in it either has money or is earning money, and may well be employing a lot of people? Therefore, he is no expense on the community, whereas the individual who is living on the Welfare State, though it may not be his fault, is a charge on the community and if he indulges in fiddling the Welfare State it is disgraceful.


My Lords, I think, if I may be permitted to say so, that it is also disgraceful to fiddle the Inland Revenue or the Customs and Excise. We all greatly deplore tax evasion, and must do so, and every effort is made by both revenue departments to deal with this matter in the most effective manner. Both revenue boards are to be congratulated on their successes in this field, which are amply demonstrated by the figures that I have quoted.


My Lords, may I ask the Minister what the departments mean, when they look into this social security fiddling or whatever it is, by "speculative figures"? They mentioned £50 million when they talked about benefits of all kinds. I heard it on the radio.


My Lords, with respect to the noble Baroness, that is not the subject matter of the Question, which relates to tax evasion.


My Lords, is the Minister aware that in 1964 when the Labour Government took office, the total amount of revenue from betting, gaming and lotteries was of the order of £34 million? It reached a figure of £400 million. Is he aware that that sum could be greatly increased if he adopted a cost-effective attitude towards the Customs and Excise staff, and did not decrease it but increased it?


My Lords, the question of dealing with tax evasion is essentially a question of the proper deployment of the available staff, rather than one of simply increasing the number of people employed.


My Lords, with great respect, before the betting, gaming and lotteries legislation was introduced in the early 'sixties, in every main police station in the country there were at least two officers—as I am sure the Minister must be aware—looking out for evasions of the law. The responsibility was then moved from the police to the Customs and Excise and the number now engaged in this job, right across the board, is quite insufficient for the job in hand.


My Lords, the question of preventing evasion in this Feld is a matter which is well within the cognisance of the Board of Customs and Excise, and I am confident that they take whatever steps are necessary in that regard.


My Lords, will the noble Lord tell the House how many tax inspectors of senior rank have left the Inland Revenue to join private companies, in order to advise those companies how to avoid tax?


My Lords, this Question relates to tax evasion, and I am quite certain that no inspectors of taxes have left the service of Her Majesty's Government in order to advise people on tax evasion.


My Lords, is my noble friend aware that the Lord President of the Court of Session, Lord Clyde, in a leading case, stated that, No man in this country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or to his property as to enable the Inland Revenue to put the largest shovel into his stores"? Would my noble friend agree that the distinction between evasion and avoidance should be very clearly understood?


My Lords, the Question relates entirely to evasion and it was to that that I directed my remarks.


My Lords, would the noble Lord consider publishing figures in exactly the same way as figures are being published of so-called scroungers on social security? The noble Lord talked about a percentage, and if the figures were published the general public would know that there is not one law for the rich and one law for the poor.


My Lords, I am grateful to the noble Baroness. Figures of this kind are published in great detail in the annual reports of both revenue departments.


My Lords, would the Minister agree that it would be cheaper to tax more on spending and less on people's savings and earnings?


My Lords, that, of course, is a legitimate observation, but it does not arise out of the Question.


My Lords, would the noble Lord agree that it is very difficult to publish figures as to the number of people who are guilty of evasion, because the only figures that can be published are of those that are found out? Can the noble Lord give us figures as to the amount which the Inland Revenue estimate is lost by evasion?


My Lords, I entirely agree with the noble Lord about the difficulty and unreliability of such estimates, which is why I was somewhat surprised to find them in the noble Lord's own Question.