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Taxing times: Panama Papers

15 April 2016

Alexandra Cardenas considers the events around the Panama Papers and provides an update on European Referendum debate.


Following two weeks of recess, both Houses of Parliament have returned to an eventful start to this next session, partly initiated by the sudden release of the so called 'Panama Papers' on Sunday 3 April. 

The prime minister on Monday made a statement to the House of Commons, defending his own connection to the issue, by making public his tax returns for the past six years, and vehemently denying any wrongdoing on his part or that of his late father. He went on to emphasise his and the previous coalition government's commitment to clamping down on tax evasion, while stating that it would now be made an offence for those who criminally facilitate tax evasion. 

There was a kick-start to the European Referendum debate this week, with the official campaigns on both sides of the argument being announced after selection by the Electoral Commission. 

Monday 11 April

House of Commons

Panama Papers - prime minister's statement

The prime minister was compelled to make a statement in the House of Commons after a fund his late father, Ian Cameron, had set up was named. Cameron responded by publishing his tax returns for the last six years, in addition to details for money received from his family. 

In terms of what's next, the PM confirmed that the government had moved to close 40 tax loopholes in the last parliament and would legislate to close a further 25 in the present parliament. He cited efforts to improve tax transparency through the G8, including the new global common reporting standards in offshore jurisdiction. Britain would become the first country in the world to have a register of beneficial ownership from the summer. 

Tuesday 12 April

House of Commons

Investigatory Powers Bill Committee

Amendments to Clause 25 'Items subject to legal privilege' of the Investigatory Powers Bill, drafted by the Bar Council and tabled by the opposition, were withdrawn after discussion in the Bill Committee's scrutiny session. 

Solicitor general Jeremy Wright QC MP made these points:

• There are inherent dangers in taking an ad hoc approach to defining a particular privilege that is well understood. It might be unintentionally affected by a well-intentioned attempt to seek to define it in the legislation

• The government's fear is that there will be exceptional cases in which the iniquity rule is not satisfied, where the material will be of relevant interest to the authorities and would be the appropriate subject for a warrant application with the double-lock mechanism: 'I am not saying that it will be commonplace - far from it. That is why we have worded the terms of the clause very carefully. We talk about 'exceptional and compelling circumstances'. I cannot imagine a higher threshold for an applicant to meet than those words'.

Conservative MP Victoria Atkins also made the point that any warrants will have to meet the threshold of the double lock, the home secretary and the judicial commissioner, who will be very careful to protect legal professional privilege.

The government is usually not willing to accept changes proposed by the opposition at Committee Stage and amendments are unlikely to pass. Despite the amendments being withdrawn, issues raised at Committee Stage are likely to be discussed again in the House of Lords as matters of importance that deserve more scrutiny time. 

Foreign Affairs Committee 

The Foreign Affairs Committee held its final evidence session on the costs and benefits of UK membership of the EU. The Committee took evidence from Rt Hon Dr Liam Fox MP, Rt Hon Gisela Stuart MP, Rt Hon Sir Malcolm Rifkind and Rt Hon Alex Salmond MP.

This session was wide ranging, covering the referendum campaign, the migrant crisis, the impact of Brexit on UK trade, the 'Norway model', sovereignty and the prime minister's reform deal. 

Wednesday 13 April

House of Commons

Opposition debate on tax avoidance

Labour held an opposition day debate on tax avoidance and evasion, moved by shadow chancellor John McDonnell MP. McDonnell called for the government to implement Labour's Tax Transparency Enforcement Programme, which calls for an immediate public inquiry into the revelations contained in the Panama Papers and to force MPs and Peers to publish details of any offshore investments they hold. 

Responding on behalf of the government, financial secretary to the treasury David Gauke and economic secretary to the treasury Harriet Baldwin both repeated the same message, saying that this government has done more than any previous government to tackle tax avoidance and tax evasion. The House voted against Labour's motion 300-266. While MPs were highly critical of banks and accountancy firms, there was no mention of legal services or solicitors. 

Read the debate in full

UK 

Official campaigns for the EU referendum announced

The Electoral Commission has designated the two lead campaigners at the EU Referendum: 

  • In Campaign Ltd (Britain Stronger In Europe) for the Remain outcome
  • Vote Leave Ltd for the Leave outcome.

Papers relating to the Electoral Commission's decision and copies of the applications made by all applicant organisations, together with supporting information, are available on the Electoral Commission's website. The applicants' campaign strategies and all personal data have been redacted from these papers.

Thursday 14 April

House of Commons

Questions to the attorney general

Attorney general Jeremy Wright QC MP was asked a question about the changes required to the UK's legal framework in the event of the UK leaving the EU. Nothing of relevance was highlighted.

Corbyn's speech on the EU

Labour leader Jeremy Corbyn delivered his first speech setting out what he called the 'socialist case' for remaining in the EU. The move represents a significant change in the EU referendum debate, as supporters of the Remain campaign, Labour MPs and, surprisingly, Downing Street have been calling for Corbyn to throw his weigh behind it, securing the Labour vote.

Highlights

• Corbyn said that the Labour Party is 'overwhelmingly for staying in' because it guarantees social protections and offers the best chance of meeting the challenges the UK faces in the 21st century: climate change, cybercrime, terrorism and international tax evasion and avoidance.

• He focused mostly on the social benefits of EU membership, highlighting human rights and employment rights, including paid holiday, maternity and paternity leave, and health and safety. He criticised the Conservative government on a number of issues, including its handling of the steel crisis, taxation and EU reform (specifically social and democratic reforms): it is 'sometimes easier to blame the EU, or worse blame foreigners', but it is the 'Conservative government that is failing the people of Britain'.

• Corbyn's key message was that 'you cannot build a better world unless you engage with the world, build allies and deliver change. The EU, warts and all, has proved itself to be a crucial international framework to do that'. Addressing his Eurosceptic background, he said that it is 'perfectly possible to be critical and still be convinced that we should remain'.

• Unsurprisingly, Corbyn used the speech to raise the issues of tax avoidance and the Panama Papers. 

• On the steel crisis, he said the Conservative government was the problem, not EU state aid rules. He criticised the government for blocking action on Chinese steel dumping.

Read the speech in full

Friday 15 April

Nothing to report.

Tags: politics | Westminster weekly update | European Union | Brexit

About the author

Alexandra Cardenas is Head of Public Affairs and Campaigns at the Law Society. Public Affairs manages the relationships with parliament and government. She is a dual qualified solicitor in England and Wales (2014), and Colombia (2002). Prior to the Society, she practised as a human rights lawyer and worked at Macmillan Cancer Support and Animal Defenders International.

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