Labour issued a press release tonight that sets out its plans for tackling tax avoidance. It says:
Labour will tomorrow (Wednesday) set out the measures it will take to tackle tax avoidance in the first months of a Labour Government.
With campaigners and NGOs backing calls for a “Tax Dodging Bill”, Labour's first Finance Bill will act to tackle tax avoidance. Labour will set out the measures in an Opposition Day Debate tomorrow (Wednesday).
Labour's motion also notes that just one out of 1,100 people who have avoided or evaded tax have been prosecuted following the revelations of malpractice at HSBC bank, which were first given to the government in May 2010.
It also calls upon Lord Green and the Prime Minister to make a full statement about his role at HSBC and his appointment as a Minister in 2011.
Labour will act in our first Finance Bill to:
· Introduce penalties for those who are caught by the General Anti-Abuse Rule
· Close loopholes used by hedge funds to avoid stamp duty
· Close loopholes like the Eurobonds loophole which allow some large companies to move profits out of the UK and avoid Corporation Tax
· Stop umbrella companies exploiting tax reliefs
· Scrapping the “Shares for Rights” scheme, which the OBR has warned could enable avoidance and cost £1bn and is administered by HMRC, and so ensure HMRC can better focus on tackling tax avoidance
· Tackle disguised self-employment by introducing strict deeming criteria
· Tackle the use of dormant companies to avoid tax by requiring them to report more frequently
Labour's measures to tackle tax avoidance will also include:
· Ensuring stronger independent scrutiny of the tax system, including reliefs, and the government's efforts to tackle tax avoidance
· Forcing the UK's Overseas Territories and Crown Dependencies to produce publicly available registries of beneficial ownership
· Making country-by-country reporting information publicly available
· Ensuring developing countries are properly engaged in the drawing up of global tax rules
I aded the underlining: they're issues where I think it fair to say my work has had some pretty direct influence on this policy agenda.
So is it all I could hope for? No of course it is not.
For start there is no commitment to extra funding at HMRC. Nothing will happen without that.
Second, there is no direct reference to the tax gap and making explicit that these issues are meant to close it. Whilst HMRC works with the current deficient version of the tax gap this problem cannot, again, be resolved.
Third, I want a general anti-avoidance principle, not a revised General Anti-Abuse Rule, but penalties sure as heck help.
Fourth, there is no mention of the extra resources needed to make sure Companies House works properly, which is as important as the changes in dormant company reporting.
Fifth, there is no mention of BEPS implementation or action on things like permanent establishment and controlled foreign companies.
And there's no Office for Tax Responsibility as yet (although the hint of one has, I note appeared, so I am hopeful).
But let me stop complaining for a moment because I will probably never be completely satisfied.
This is a package that indicates commitment to listen and commitment to change. It is a package that looks across the board at the issues of concern. And it addresses a fair range of items into debate. I welcome that, of course. The devil is always in the detail but there is room for manoeuvre in here and many statements are moves in the right direction when those are sorely needed. That is what is needed for now, and I'll take it at that level.
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Looks like boom time for new company incorporations in Hong Kong, Singapore, Delaware, Mauritius, UAE, Panama and the Bahamas then, administered in the Crown Dependencies and Overseas Territories. And how exactly will that help the UK?
Not at all
But deemed residence may then become a concept required registration
Richard
Not sure that I have understood your point. Deemed residence by whom?
UK
Richard
Sorry but you are being too cryptic for me. Please elaborate.
Unfortunately I cannot see the thread when I moderate
So apologies if I don’t: I can’t recll what I said
What are the motives for not mentioning the tax gap?
Other than embarrassment at (say) the odd six billion in Luxembourg?
This is a deliberate exclusion and we would do well to ask why.
At the very least, we must examine the possibility that the political actors are deluded, or utterly unaware of an ‘elephant in the room’ reality that should be shaping or defining their decisions.
The alternative explanations are unedifying.
Actually, the other explanations are worrying: it’s a wilful refusal to confront criminality and impunity by the powerful, on a scale that undermines the state. There are no good reasons for that, and several bad ones.
Labour knows that tax avoidance is very unpopular. There is an election in May.
Politicians say many things before an election and somehow don’t quite manage to implement all of them after it.
Personally I feel that the omissions you point out are indeed deliberate to reassure big business – with whom they are very close. I don’t expect their position on tax will hinder them from continuing to take advice from PwC.
We have to accept the possibility that rejection from business quarters may well be just calculated posturing. Having Labour in power probably suits business nicely.
Labour’s business minister Chuka Umunna takes advice from Tony Blair & Peter Mandelson, both of whom he admires. http://www.totalpolitics.com/articles/316532/chuka-umunna-on-meeting-tony-blair.thtml
Labour backs TTIP which, like their tax omissions here,is equally indefensible and utterly against the public interest.
Labour are neither naive nor incompetent; they are complicit. I think that is precisely why they come across that way. It makes the marketing such hard work!
It is unofrtunatelty the case that all major political parties have a problem with being slippery with meaning
There are ambiguities in what Labour ha said
BUT it is better than saying nothing
And better than screaming macthes
“stop umbrella companies exploiting tax reliefs” is worth underlining as well. It has employment rights implications as well as tax fraud.
Currently when a factory moves from a permanent directly employed workforce to “temporary” labour supplied through a labour provider/umbrella company set up it is claimed that all the workers travel and subsistence expenses are tax free. Deductions are made from workers wages so that the workers only see pennies of benefit from this -and the insecure workforce out=competes a secure workforce.
Agreed
I am afraid you will find that any change is designed only to collect tax, it will offer nothing to the worker as a result. You only need to look at the introduction of IR35 by the labour party. Individuals picked up all the tax liabilities of employment, but none of the protections. All the subsequent legislation dealing with the issues IR35 created has done the same thing.
I agreed completely with your comments until I reached your last two paragraphs.
Labour’s measures are complete hot air without proper implementation. I remember the state of Tax consultation and knowledge when Labour was last in power, it was far worst than the Coalition, whatever their faults. Sorry, as usual with the UK political elite, a huge preponderance of lawyers and career politicians in Parliament think they only have to pass laws to achieve objectives. I am really surprised at you swallowing this proposed bill.
Have I swallowed anything when I list a whole range of additional issues I want addressed?
I’ll reply for Stephen. The answer is ‘No’.
I do wish these people would read and then react rather than react and then…………………….sign off.
Richard, How have the NGOs received this? (ActionAid & War on Want as well as Christian Aid have tax justice as high priority) It is no where near far enough and bearing in mind the culture of lying to get elected and then doing less, I don’t think anyone should be accept this. On Monday I went to a local meeting of 38 Degrees members – our MP is the slippery Chuka Umunna Shadow Business Sec. We are taking steps to hold him to account and I can tell you their are some very angry people who are fed up with the whole Westminster approach (and I am talking about mostly middle class wrinklies) No-one wants this government but also doesn’t trust anyone else. Labour has a long way to go to get the trust of the public, tax dodging is finally a top issue and this wont be acceptable. This is an oportunity to regain public confidence to get a ruling majority and once again, like Brown when he held all the cards after the banking crisis, they are acting like a middle of the road safe non labour party.
They are welcoming it, and like me saying they want more
Rightly so
Well, it’s a start.
All that needs to happen now is that we give them a chance – hopefully in coalition with other partys like the Greens etc.
Our thought is to support our Greens candidate Jonathan Bartley who has some really good policies and beliefs and seems really trustworthy.. if Chuka gets the feeling that he is not as secure as he believes he is in Lambeth, then maybe he & they will have to start listening to the people they represent. He is tipped for the next leader of the Labour Party, so we are not going for small fish.
Good luck. Chukka seems to be another one of those ‘value free’ politicians who could survive in ANY party.
No, of course I don’t believe you will swallow this whole. But I think you are giving false hope. I can count on the fingers of one hand Labour MPS that understand much about tax. On the other hand, this might apply to other parties as well……………
But sometimes wise parties ask people who do
The Guardian article on non-doms is utter garbage. The authors clearly do not understand tax law.
An Italian resident in the UK is not liable to tax in Italy on offshore bank interest. Italy does not tax based on citizenship – it taxes based on residency. The footballer was clearly non-domiciled in the UK. He is not liable to tax on non-UK source income from a foreign bank account, unless remitted to the UK. So what’s the story?
The law of domicile is very clear. A child automatically takes the domicile status of his father at birth, and can reinforce it by maintaining close links with the country of domicile once he reaches adulthood.
What is wrong with exploiting a law which every British government of recent years has expressly supported?
Your view on domicile law is simplistic, naive and wrong. It is not perpetual as you imply
And I also note you are happy with discrimination on the basis of accident of birth. I am not. See blog today
Richard
Where did I imply that it is perpetual? I never said that! I said that a non-Dom “can reinforce it by maintaining close links”, which surely means that if he does not maintain close links then it is at risk!
I’m neither happy nor unhappy with the discrimination. I see both sides of the argument. But it is the law of the land and until it changes it remains the law of the land. My work depends on following the law and not ignoring it or breaking it. If I ignore it then as a tax advisor I will be sued.
You need not be sued
You make clear what you will or will not do
But that requires clarity of communication – and that’s not apparent in your first comment
And then go and spoil it by saying something stupid like …
“Businesses that sign up to paying the living wage will be given a 12 month tax break under plans unveiled by Ed Miliband.”
http://www.channel4.com/news/living-wage-labour-tax-break-business-worker
(with apologies to Frank and Nancy Sinatra)