All multinationals plan and manage their tax compliance. The amount of tax they have to pay is affected by a range of factors, including how they arrange their affairs. There are a range of rules designed to ensure that profits earned in the UK are taxed here. HM Revenue & Customs ensures that multinationals pay the tax that is due under UK tax law.

On 3 December 2012, the Government announced a further investment of £77 million in HM Revenue and Customs (HMRC) to expand its anti-avoidance and evasion activity, specifically focusing on offshore evasion and avoidance by wealthy individuals and multinationals. This is expected to bring in an additional £2 billion in tax, per year, that would have otherwise gone unpaid. As part of this investment, HMRC will expand its risk assessment capability across the large business sector and increase its specialist transfer pricing resources to speed up its work to identify and challenge the transfer pricing arrangements of multinationals.

Following the Chancellor’s G20 call for international co-operation to strengthen corporate tax standards, the UK, French and German Governments have pledged resources to the Organisation for Economic Co-operation and Development in order to progress work to tackle profit shifting and base erosion at the global level.

The Financial Stability Report (FSR) was published on 29 November 2012. The FSR is published twice a year under the guidance of the interim Financial Policy Committee, which brings together senior officials from the Bank of England and the Financial Services Authority (FSA) and independent members. The FSR covers the committee’s assessment of the outlook for the stability and resilience of the financial sector at the time of preparation of the report, and the policy actions it advises to reduce and mitigate risks to stability.

Assessments of how UK banks value their books fall within the competence of the Bank of England and the Financial Services Authority. The Treasury is responsible for the overall institutional structure of financial regulation and the legislation which governs it and has no operational responsibility for the activities of the FSA and the Bank.

The facility to file returns online to HM Revenue and Customs (HMRC) does not depend on the individual office but on the tax regime. Excise duty covers a number of tax regimes, including hydrocarbon oils, alcohol, tobacco, holding and movement (of excise goods), air passenger duty and gambling.

The table below sets out the tax regimes that do not permit online filing of excise duty returns.

HMRC is developing a digital strategy which will set out how it will deliver its digital and internet services in the future. This strategy is due to be published in December 2012.

List of excise regimes that do not provide online filing

Gambling Regimes

Bingo Duty

Betting Duty

Amusement Machine Licence Duty (to be replaced by the Machine Games Duty from February 2013 which will provide online filing)

Lottery Duty

Gaming Duty

Pool Betting Duty

Remote Gaming Duty

Environmental Taxes

Climate Change Levy

Aggregates Levy

Landfill Tax

Air Passenger Duty

Alcohol Regimes

Wine and Cider

Beer

Transport Taxes

Hydrocarbon Oil

Bio-diesel/Fuel substitutes

Gas for use as a Road Fuel

Tobacco

Tobacco Products Duty

Holding and Movements

Registered Consignors

Registered Mobile Operators

Export Shops

HMRC aims to complete processing of excise duty returns for biofuels and other fuel substitutes by the 21st of each month. The due date for the returns is the 15th of each month. HMRC reports the return details by agreement with the Department for Transport (together with details of other fuel returns) on the 14th of the following month.

HM Revenue and Customs (HMRC) currently has no plans to introduce an online filing service for fuel excise duties currently processed in Cumbernauld. HMRC is developing a digital strategy which will set out how it will deliver its digital and internet services in the future.

The Government welcome the All-Party Parliamentary Beer Group report on beer fraud, published on 16 July 2012. The group's recommendations will be considered alongside the other responses to the Government's consultation on legislative options to tackle alcohol fraud, which closed on 16 July.

The Government intend to publish a summary of the findings of that consultation later this year.

Business groups such as the CBI have endorsed government action to reduce the fiscal deficit in order to restore the public finances to a sustainable path, and have supported the major reforms set out in the plan for growth.

Implementation of these remains a priority right across government. Despite the challenging economic backdrop, the Government have already made significant progress.

In relation to infrastructure investment, there has also been significant progress. For example, all 20 of the road schemes announced at Spending Review 2010 and Autumn Statement 2011 are currently scheduled to start on time; work is beginning this month on the £20 million package designed to reduce congestion on the Al4 in Cambridgeshire; there are 66 wind farms currently in construction across the country, which, once complete, will generate enough electricity to serve 2.25 million homes; enabling construction works have begun for Hinkley Point C; and recently the Government committed an additional £4.2 billion for rail schemes across the country.

Details of the loans to Icelandic banks as at 31 March 2011, including repayments and interest received, can be found in Sections 33, 34 and 36 of the Treasury annual reports and accounts 2010-11. The report can be accessed via the following web link: http://www.hm-treasury.gov.uk/d/annual_report_accounts140711.pdf.

Figures as at 31 March 2012 will shortly be published in the Treasury annual reports and accounts 2011-12.

The Excise Movement and Control System (EMCS) is contributing to the revenue outputs set out in Her Majesty's Revenue and Customs' (HMRC) tackling alcohol fraud strategy. For the first time, HMRC and Border Force officials have access in real time to data on intra-EU movements of excise goods that help them better identify and target illicit movements of goods. Since the first phase of EMCS was implemented on 1 April 2010, there has been a significant increase in the revenue yield from registered consignees—businesses authorised to receive duty suspended goods. In their report on Progress with HMRC's renewed alcohol strategy, published in January this year, the NAO attributed this increase to the fact that some consignments of excise goods that would otherwise have been diverted and sold illicitly on the UK market are no longer able to escape detection.

The Warehousekeepers and Owners of Warehouse Goods Regulations 1999 (WOWGR) are making an effective contribution to reducing excise fraud as they guard against unsuitable persons gaining access to duty-suspended goods. Under the regulations warehouse keepers and owners of goods in warehouse are required to be approved by HMRC and are subject to rigorous scrutiny. Applications are rejected if the applicant

does not pass a fit and proper test. The current rejection rate is 40%. Once approved the approval may be revoked or varied at any time for reasonable cause, such as evidence of duty fraud. Where duty fraud is identified, the warehousekeeper/owner may be subject to criminal prosecution and/or heavy financial penalties. HMRC will seek to recover duty losses and may issue civil penalties.

The administrative reference code (ARC) is key to the effectiveness of the Excise Movement and Control System (EMCS) in helping to reduce excise fraud. Each movement of duty-suspended excise product can be identified by its own unique reference number on EMCS. This can be accessed 24/7 by HMRC and Border Agency staff at any time giving complete visibility to movements that was not available under the previous paper-based system. Any movement of duty-suspended excise goods that is not accompanied by a valid ARC is liable to seizure. Assessments for duty owing and penalties may also be raised.

Spirits duty stamps were introduced in 2006 as a key plank of HMRC’s original strategy to address alcohol duty fraud. Estimated revenue losses from spirits fraud were £320 million in that year. They reduced to £130 million by the end of 2009-10.

The Excise Movement and Control System (EMCS) is contributing to the revenue outputs set out in Her Majesty's Revenue and Customs' (HMRC) tackling alcohol fraud strategy. For the first time, HMRC and Border Force officials have access in real time to data on intra-EU movements of excise goods that help them better identify and target illicit movements of goods. Since the first phase of EMCS was implemented on 1 April 2010, there has been a significant increase in the revenue yield from registered consignees—businesses authorised to receive duty suspended goods. In their report on Progress with HMRC's renewed alcohol strategy, published in January this year, the NAO attributed this increase to the fact that some consignments of excise goods that would otherwise have been diverted and sold illicitly on the UK market are no longer able to escape detection.

The Warehousekeepers and Owners of Warehouse Goods Regulations 1999 (WOWGR) are making an effective contribution to reducing excise fraud as they guard against unsuitable persons gaining access to duty-suspended goods. Under the regulations warehouse keepers and owners of goods in warehouse are required to be approved by HMRC and are subject to rigorous scrutiny. Applications are rejected if the applicant

does not pass a fit and proper test. The current rejection rate is 40%. Once approved the approval may be revoked or varied at any time for reasonable cause, such as evidence of duty fraud. Where duty fraud is identified, the warehousekeeper/owner may be subject to criminal prosecution and/or heavy financial penalties. HMRC will seek to recover duty losses and may issue civil penalties.

The administrative reference code (ARC) is key to the effectiveness of the Excise Movement and Control System (EMCS) in helping to reduce excise fraud. Each movement of duty-suspended excise product can be identified by its own unique reference number on EMCS. This can be accessed 24/7 by HMRC and Border Agency staff at any time giving complete visibility to movements that was not available under the previous paper-based system. Any movement of duty-suspended excise goods that is not accompanied by a valid ARC is liable to seizure. Assessments for duty owing and penalties may also be raised.

Spirits duty stamps were introduced in 2006 as a key plank of HMRC’s original strategy to address alcohol duty fraud. Estimated revenue losses from spirits fraud were £320 million in that year. They reduced to £130 million by the end of 2009-10.

The Excise Movement and Control System (EMCS) is contributing to the revenue outputs set out in Her Majesty's Revenue and Customs' (HMRC) tackling alcohol fraud strategy. For the first time, HMRC and Border Force officials have access in real time to data on intra-EU movements of excise goods that help them better identify and target illicit movements of goods. Since the first phase of EMCS was implemented on 1 April 2010, there has been a significant increase in the revenue yield from registered consignees—businesses authorised to receive duty suspended goods. In their report on Progress with HMRC's renewed alcohol strategy, published in January this year, the NAO attributed this increase to the fact that some consignments of excise goods that would otherwise have been diverted and sold illicitly on the UK market are no longer able to escape detection.

The Warehousekeepers and Owners of Warehouse Goods Regulations 1999 (WOWGR) are making an effective contribution to reducing excise fraud as they guard against unsuitable persons gaining access to duty-suspended goods. Under the regulations warehouse keepers and owners of goods in warehouse are required to be approved by HMRC and are subject to rigorous scrutiny. Applications are rejected if the applicant

does not pass a fit and proper test. The current rejection rate is 40%. Once approved the approval may be revoked or varied at any time for reasonable cause, such as evidence of duty fraud. Where duty fraud is identified, the warehousekeeper/owner may be subject to criminal prosecution and/or heavy financial penalties. HMRC will seek to recover duty losses and may issue civil penalties.

The administrative reference code (ARC) is key to the effectiveness of the Excise Movement and Control System (EMCS) in helping to reduce excise fraud. Each movement of duty-suspended excise product can be identified by its own unique reference number on EMCS. This can be accessed 24/7 by HMRC and Border Agency staff at any time giving complete visibility to movements that was not available under the previous paper-based system. Any movement of duty-suspended excise goods that is not accompanied by a valid ARC is liable to seizure. Assessments for duty owing and penalties may also be raised.

Spirits duty stamps were introduced in 2006 as a key plank of HMRC’s original strategy to address alcohol duty fraud. Estimated revenue losses from spirits fraud were £320 million in that year. They reduced to £130 million by the end of 2009-10.

The Excise Movement and Control System (EMCS) is contributing to the revenue outputs set out in Her Majesty's Revenue and Customs' (HMRC) tackling alcohol fraud strategy. For the first time, HMRC and Border Force officials have access in real time to data on intra-EU movements of excise goods that help them better identify and target illicit movements of goods. Since the first phase of EMCS was implemented on 1 April 2010, there has been a significant increase in the revenue yield from registered consignees—businesses authorised to receive duty suspended goods. In their report on Progress with HMRC's renewed alcohol strategy, published in January this year, the NAO attributed this increase to the fact that some consignments of excise goods that would otherwise have been diverted and sold illicitly on the UK market are no longer able to escape detection.

The Warehousekeepers and Owners of Warehouse Goods Regulations 1999 (WOWGR) are making an effective contribution to reducing excise fraud as they guard against unsuitable persons gaining access to duty-suspended goods. Under the regulations warehouse keepers and owners of goods in warehouse are required to be approved by HMRC and are subject to rigorous scrutiny. Applications are rejected if the applicant

does not pass a fit and proper test. The current rejection rate is 40%. Once approved the approval may be revoked or varied at any time for reasonable cause, such as evidence of duty fraud. Where duty fraud is identified, the warehousekeeper/owner may be subject to criminal prosecution and/or heavy financial penalties. HMRC will seek to recover duty losses and may issue civil penalties.

The administrative reference code (ARC) is key to the effectiveness of the Excise Movement and Control System (EMCS) in helping to reduce excise fraud. Each movement of duty-suspended excise product can be identified by its own unique reference number on EMCS. This can be accessed 24/7 by HMRC and Border Agency staff at any time giving complete visibility to movements that was not available under the previous paper-based system. Any movement of duty-suspended excise goods that is not accompanied by a valid ARC is liable to seizure. Assessments for duty owing and penalties may also be raised.

Spirits duty stamps were introduced in 2006 as a key plank of HMRC’s original strategy to address alcohol duty fraud. Estimated revenue losses from spirits fraud were £320 million in that year. They reduced to £130 million by the end of 2009-10.

My Lords, changes in tax law are normally confirmed at least three months before the tax year in which they come into effect or the publication of the Finance Bill in which they are to be included. The Government normally announce such changes at Budget for enactment through the following year’s Finance Bill. The Government also consult on most changes to tax law, unless they are straightforward changes, revenue protection measures or areas where there is a risk of forestalling.

The Monetary Policy Committee publishes economic forecasts in the Bank of England’s quarterly inflation reports.

As the May 2012 Inflation Report notes, “The single biggest threat to the [UK] recovery stems from the challenges within the euro area”.

The outlook for growth in the May report has been revised since February. As explained in the report, in the near term this reflects “the impacts of a higher near-term outlook for inflation on real incomes and the higher level of sterling on net trade. Further out in the forecast period the profile is lower due to a slower

pickup in productivity growth and the implications that this is likely to have for household and business spending”.

The Governor of the Bank of England made clear at the inflation report press conference on 16 May that “the big picture remains one in which the economy gradually recovers”.

HMRC estimates losses in revenue associated with illicit sales of beer, spirits, tobacco products and oils. These are published in chapters 3, 4 and 5 of Measuring Tax Gaps 2011, available online here: http://www.hmrc.gov.uk/stats/measuring-tax-gaps.htm

Figures for tobacco products and oils are published for each year from 2000-01 to 2009-10, for spirits each year from 2001-02 to 2009-10 and for beer each year from 2002-03 to 2009-10. Estimates are not available for earlier years.

For beer, more recent and improved estimates were published in Improved Beer Tax Gap Estimate: Lower Bound (http://www.hmrc.gov.uk/stats/beer-tax-gap-feb2012.pdf).

The methodologies used for producing each of these tax gap estimates can be found in the accompanying methodological annex (http://www.hmrc.gov.uk/stats/mtg-annex2011.pdf).

Estimates of the illicit market for wine are not available.

Separate estimates of duty losses due to smuggling are not made as the estimates of the total illicit market cannot be broken down into their component parts.

HMRC estimates losses in revenue associated with illicit sales of beer, spirits, tobacco products and oils. These are published in chapters 3, 4 and 5 of Measuring Tax Gaps 2011, available online here: http://www.hmrc.gov.uk/stats/measuring-tax-gaps.htm

Figures for tobacco products and oils are published for each year from 2000-01 to 2009-10, for spirits each year from 2001-02 to 2009-10 and for beer each year from 2002-03 to 2009-10. Estimates are not available for earlier years.

For beer, more recent and improved estimates were published in Improved Beer Tax Gap Estimate: Lower Bound (http://www.hmrc.gov.uk/stats/beer-tax-gap-feb2012.pdf).

The methodologies used for producing each of these tax gap estimates can be found in the accompanying methodological annex (http://www.hmrc.gov.uk/stats/mtg-annex2011.pdf).

Estimates of the illicit market for wine are not available.

Separate estimates of duty losses due to smuggling are not made as the estimates of the total illicit market cannot be broken down into their component parts.

HMRC estimates losses in revenue associated with illicit sales of beer, spirits, tobacco products and oils. These are published in chapters 3, 4 and 5 of Measuring Tax Gaps 2011, available online here: http://www.hmrc.gov.uk/stats/measuring-tax-gaps.htm

Figures for tobacco products and oils are published for each year from 2000-01 to 2009-10, for spirits each year from 2001-02 to 2009-10 and for beer each year from 2002-03 to 2009-10. Estimates are not available for earlier years.

For beer, more recent and improved estimates were published in Improved Beer Tax Gap Estimate: Lower Bound (http://www.hmrc.gov.uk/stats/beer-tax-gap-feb2012.pdf).

The methodologies used for producing each of these tax gap estimates can be found in the accompanying methodological annex (http://www.hmrc.gov.uk/stats/mtg-annex2011.pdf).

Estimates of the illicit market for wine are not available.

Separate estimates of duty losses due to smuggling are not made as the estimates of the total illicit market cannot be broken down into their component parts.

HMRC estimates losses in revenue associated with illicit sales of beer, spirits, tobacco products and oils. These are published in chapters 3, 4 and 5 of Measuring Tax Gaps 2011, available online here: http://www.hmrc.gov.uk/stats/measuring-tax-gaps.htm

Figures for tobacco products and oils are published for each year from 2000-01 to 2009-10, for spirits each year from 2001-02 to 2009-10 and for beer each year from 2002-03 to 2009-10. Estimates are not available for earlier years.

For beer, more recent and improved estimates were published in Improved Beer Tax Gap Estimate: Lower Bound (http://www.hmrc.gov.uk/stats/beer-tax-gap-feb2012.pdf).

The methodologies used for producing each of these tax gap estimates can be found in the accompanying methodological annex (http://www.hmrc.gov.uk/stats/mtg-annex2011.pdf).

Estimates of the illicit market for wine are not available.

Separate estimates of duty losses due to smuggling are not made as the estimates of the total illicit market cannot be broken down into their component parts.

HMRC estimates losses in revenue associated with illicit sales of beer, spirits, tobacco products and oils. These are published in chapters 3, 4 and 5 of Measuring Tax Gaps 2011, available online here: http://www.hmrc.gov.uk/stats/measuring-tax-gaps.htm

Figures for tobacco products and oils are published for each year from 2000-01 to 2009-10, for spirits each year from 2001-02 to 2009-10 and for beer each year from 2002-03 to 2009-10. Estimates are not available for earlier years.

For beer, more recent and improved estimates were published in Improved Beer Tax Gap Estimate: Lower Bound (http://www.hmrc.gov.uk/stats/beer-tax-gap-feb2012.pdf).

The methodologies used for producing each of these tax gap estimates can be found in the accompanying methodological annex (http://www.hmrc.gov.uk/stats/mtg-annex2011.pdf).

Estimates of the illicit market for wine are not available.

Separate estimates of duty losses due to smuggling are not made as the estimates of the total illicit market cannot be broken down into their component parts.