§ Mr. SternTo ask the Chancellor of the Exchequer if he will make a statement on the Government's policy towards countering tax avoidance.
§ Mr. DorrellThe Government remain determined to prevent the growth of tax avoidance to the level that existed before 1979. And over the last 14 years a large number of measures has been introduced to counter avoidance, including some in the present Finance Bill.
Any taxpayer is entitled to order his affairs within the law to reduce to a minimum the amount of tax which he is likely to pay and is entitled to be protected against retrospective action by the Government or by Parliament which would reduce that right. But there is a point when avoidance can be regarded as improper and unacceptable, deserving to be looked at critically, and deserving to be stopped because it amounts to a defiance of, or an escape from, the underlying intention of the legislation.
In countering tax avoidance, the Government will continue to use a number of techniques which have proved successful in the past; these include rendering avoidance ineffective from the date of a clear announcment to do so, rather than necessarily waiting for the passage of legislation, and ensuring that Inland Revenue clearance procedures are not abused to the extent that they become part of the mechanism for constructing avoidance schemes.