§ Mr. Edwin Wainwrightasked the Chancellor of the Exchequer, if there have been any recent changes in the administrative' arrangements for cooperation between the United Kingdom and the United States of America in ensuring that the proper tax is paid on the income and profits of individuals and companies operating internationally; and if he will make a statement.
§ Mr Denzil DaviesThe Inland Revenue has recently entered into a working arrangement with the United States Internal Revenue Service for the simultaneous examination of the affairs of related taxpayers with substantial operations in both countries. I have arranged for a copy of it to be placed in the Library.
Our double taxation convention with the United States provides for the exchange of information in order to carry out the purposes of the convention, to prevent fiscal evasion and to administer the statutory provisions against legal avoidance, under rules which protect the confidentiality of information about the affairs of taxpayers. The working arrangement was made under the terms of these provisions. Under it each country's tax authority will separately examine the affairs of taxpayers within its own jurisdiction but the tax authorities will coordinate their examination of important cases in order to make more efficient and effective use of their powers to exchange information. This will help them for example in considering the transfer prices adopted in transactions between affiliated companies in multinational groups.