The Pre Budget Report: a time to tackle tax avoidance

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The Guardian reports:

The government's crackdown on tax avoidance and evasion has raised over £1bn in just 18 months, and speculation is growing that Alistair Darling is preparing a fresh raft of tough anti-avoidance measures in his pre-budget report next week.

A TUC analysis of recent government measures suggests that rules to stamp out abuses by companies illegally funnelling profits through foreign subsidiaries has raised £150m, while a clampdown on foreign exchange abuse, double tax relief abuse and other "routine measures" has raised £420m.

The TUC is pushing for a ratcheting up of anti-avoidance measures in a bid to protect public services from being cut as pressure grows to close gaping holes in the public finances.

The TUC wishes to see an overhaul of complex domicile and residency rules and a crackdown on abuses when companies transfer the ownership of intellectual property into tax havens — a practice highlighted by the Guardian's Tax Gap series.

Brendan Barber, the TUC leader, said: "The government has made a good start in cracking down on tax avoidance and HMRC has shown real determination in chasing the tax dodgers. But there is still huge potential to raise a significant amount of money from a fairer tax system that asks the super-rich to make a proper contribution … Too many say the next government will have to make big cuts in vital services or make ordinary people pay more tax. But there is an alternative and that is to ask those who did so well out of the boom to start paying a fairer share of tax."

The TUC is also calling for a reversal of the current round of job cuts facing Revenue & Customs staff. The HMRC is in the process of cutting 25,000 staff — equivalent to a quarter of its workforce. Civil service union, PCS, is up in arms at the cuts and the closure of 250 offices as part of "efficiency savings". It believes the job cuts will lead to billions of pounds of unpaid tax going begging.

The report is based on a new TUC publication out today. See the next blog for more details.

Disclosure: I wrote the TUC report.