Treasury moves to clamp down on tax avoidance
The Treasury hopes to secure a windfall of £2 billion and protect a further £5 billion from measures to crack down on tax avoidance.
But the move has come under heavy criticism from unions for not being stringent enough.
Announcing the plans, Treasury minister David Gauke revealed that a review would report by October next year looking into a ‘general anti-avoidance rule’ (GAAR).
The device can take various forms and may be used to remove the tax advantages from a given transaction if it is deemed to be deliberately pursuing tax avoidance.
Other measures which take effect either immediately or in next year’s Budget include prohibiting companies from using complex financial devices such as derivatives for tax-saving purposes and preventing the retrospective changing of currencies by investors to decrease their tax bill.
Mr Gauke said the government was “fully committed to tackling tax avoidance”.
Protests against the practise took place over the weekend at stores such as Topshop and Vodafone, which campaigners say the government is allowing to escape billions of pounds worth of tax.
Sir Philip Green, whose company owns Topshop and is an advisor to the government on tackling waste, has come under particular criticism for a dividend of £1.2 billion transferred from the company to his wife – who is a resident of Monaco.
The government has made commitments to crack down on tax avoidance in order to ease the impact of public spending cuts, though the £2 billion figure suggested by Mr Gauke was dismissed as insufficient by unions.
Soon-to-be general secretary of Unite, Len McCluskey called the measures “a Christmas gift worth billions to businesses exploiting tax loopholes.
“If the government got tough on tax avoidance it could have raised up to £25 billion. Instead the coalition will continue dismantling our public services while their friends in the city – the culprits of the financial crisis – avoid paying their fair share of tax.”
Mark Serwotka, general secretary of the Public and Commercial Services union added: “The truth is, this government shamefully has very little interest in challenging wealthy individuals and big businesses who deprive our economy of tens of billions of pounds by dodging paying taxes they owe.”
But Will Morris, head of the CBI’s tax committee, criticised the plans, saying: “We believe that would not be in the interest of the government, taxpayers, or UK competitiveness. It would introduce a very unwelcome element of uncertainty.”
