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Income Tax

I join my hon. Friend the Member for Cities of London and Westminster (Mr. Field) in congratulating the Financial Secretary on his promotion. I also congratulate my hon. Friend on his nomination to the Front Bench. I wish to place it on record that, despite all the work on and good intentions in agreements such as those that have been reached between the European Union and the four territories, they will not be effective. People who are intent on evading tax will continue to do that by one of two simple expedients. First, they could move their funds out of the territories in the knowledge that the regime will change. Is it part of the agreement that the authorities in the territories inform the EU or the tax authorities in EU countries of whether existing deposit holders there, who are believed to be resident in the EU, now move their funds out? Will the Inland Revenue or any such authority in the EU know about that? It is the obvious response of someone who is determined to continue to avoid or evade tax. I suggested the second response in my earlier intervention. People will simply say that they are not resident in the EU. I presume that, in cases of doubt, depositors will now be asked whether they are resident in the EU. It is clearly a question that expects the answer ““no”” in the case of people who are determined to avoid tax in the EU. They will simply register their residence in some territory—perhaps Outer Mongolia—that does not have an agreement with the EU. There is no danger of credit risk to the depositor in doing that because the funds will remain in a particular bank in a specific territory. It is possible for depositors to examine their accounts and talk to their fund managers on the spot so no one will know whether they are resident in, for example, Outer Mongolia or Somalia. They may transfer their funds into some Liechtenstein Anstalt or a similar corporate vehicle, which will then be the deposit holder and resident outside the EU. There are so many ways around the matter that the Government are deluding themselves if they believe that they have found an effective remedy for that form of tax evasion.