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Last Updated: Sunday, 17 February 2008, 14:19 GMT
David Gauke interview
On the Politics Show, Sunday 17 February 2008, Jon Sopel interviewed Shadow Treasury Minister, David Gauke MP

Interview with David Gauke MP, Shadow Treasury Minister

JON SOPEL: I'm joined now by the Shadow Treasury Minister, David Gauke, Mr Gauke, welcome to the Politics Show, thanks very much for being with us.

Are you opposed to the Treasury trying to close a tax loop hole, which as we heard Evan there was saying was worth two hundred and fifty million pounds.

DAVID GAUKE: Well the effect of these proposals is not really going to be to close a tax loophole, indeed they may well be technically defective and unable to do that.

But it's going to impose a huge administrative burden on lots of family businesses and if you look at the remarks coming from the accountants, coming from the Institute of Directors, it's absolutely damning and these are people who are not prone to be over-excited but they're referring to this as hopeless, as a failing on the tests of workability, practicality and certainty and not fit for purpose.

JON SOPEL: So the government shouldn't even be trying to close this loop hole.

DAVID GAUKE: Well, if the damage done by trying to eliminate what is described as a loop hole is going to be so terrible, is going to cause such an administrative burden on, on family businesses, then actually, I think they are going down the wrong root.

JON SOPEL: What would the Tories do, just leave this all alone.

DAVID GAUKE: Well, I don't think there's anything too terrible about transferable allowances, most countries run that system and businesses have been working for years on the basis that dividends can be divided between family members so I'm not sure that we're talking about something that is that outrageous but even if was, if you can't come up with practical ways of addressing it, then you are better leaving it alone.

JON SOPEL: What about independent taxation. Where does that leave independent taxation.

DAVID GAUKE: Well we've still got the principle of independent taxation but in this particular circumstance, what family businesses are going to have to do to comply with the Treasury's guidance is produce time sheets to demonstrate everything that every member of the family does to produce detailed evidence in order to justify what ever family member does.

JON SOPEL: So you're saying it's fine then if you are part of a small self employed family business but obviously if you work, if you're an employee of I don't know a big petrochemical company and you earn seventy thousand pounds a year, you're going to pay 40% tax on all of that. You can't offset that and give half of it to your spouse.

DAVID GAUKE: Well look, family businesses, all businesses are under a great deal of pressure at the moment but to implement these proposals is going to place an administrative burden I'm afraid it's the government, they're failing to understand that we rely on our businesses to create the wealth that we have in this country. And they are just going to hamper that.

JON SOPEL: So when we hear the next set of Tory proposals saying we're going to clamp down on this and that, we should perhaps take it with a pinch of salt because you're saying, if it's too complicated, leave it alone.

DAVID GAUKE: Well family businesses are acting in accordance with the law, it's been accepted for a long time the way in which dividends can be divided. Indeed the government brought a case and as Evan Davis said, they tried to bring a case and it failed.

So the law is clear as it stands at the moment. It is working but if the government goes down this route, then I'm afraid it's going to be bad news for family businesses, it's simply going to be impractical.

JON SOPEL: What do you think is going to happen here. What's your guess.

DAVID GAUKE: Well I hope, I mean given the strength of feeling and strength of language coming from the experts, I think the government are really going to have to look at this again.

I hope they do because the proposals they have are clearly not fit for purpose, to use the language of the Chartered Institute of Taxation and in those circumstances, I hope as with non doms, as we CGT, we're going to see a partial climb down, if not a complete climb down from Alistair Darling once again.

JON SOPEL: Don't you worry that it sends a message that the Tory's view on tax is, if it's too complicated, we'll just leave it alone and leave the loop holes there.

DAVID GAUKE: The Tories message on tax is we want to see greater simplification. We want to deal with many of the problems in the tax system and this is about more complexity and it's about more regulation for thousands of family businesses in this country.

JON SOPEL: David Gauke, thank you very much for being with us on The Politics Show.


Please note BBC Politics Show must be credited if any part of these transcripts are used.

NB:These transcripts were typed from a recording and not copied from original scripts.

Because of the possibility of mis-hearing and the difficulty, in some cases, of identifying individual speakers, the BBC cannot vouch for their accuracy.

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The Politics Show Sunday 10 February 2008 at 12:00 GMT on BBC One.
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