A recent email campaign sought to suggest that this Government has been soft on tax avoidance and evasion. It is not true.
As the responsible minister, David Gauke, has set out:
- HMRC has secured more than £85 billion in compliance yield since the beginning of the Parliament, £31 billion from large businesses and £850 million from high-net-worth individuals.
- The Government introduced the UK’s first general anti-abuse rule to tackle abusive tax avoidance arrangements.
- The Finance Act 2014 introduced measures to ensure that individuals and businesses suspected of involvement in tax avoidance schemes, have to pay HMRC the disputed amount of tax up front while the dispute is being resolved.
- This Government has closed tax loopholes left open by the previous administration in every year of this Parliament.
- The measures the Government has taken this Parliament to tackle aggressive tax planning, avoidance and evasion add up to £7.6 billion in additional revenues in 2015-16. HMRC’s successes were recognised by the National Audit Office in its report, “Increasing the effectiveness of tax collection: a stock-take of progress since 2010”.
I appreciate that people do not believe politicians. Below are some extracts of what HMRC’s Chief Executive, Lin Homer said on 25 Feb 2015 when giving evidence in relation to HSBC in a what was a somewhat combative session. I present her evidence in logical order. I think informed people would not accuse Ms Homer of being a Conservative partisan.
Q204 Lin Homer: I think our Government has been at the forefront of the international conversations about stronger international collaboration.
Q207: Lin Homer: … an aspect of our remit letters [from the Chancellor] over the last five years has been about bearing down on avoidance and evasion, and so we received specific investment to increase the number of prosecutions.
Q208 Lin Homer: Criminal prosecutions have increased fivefold over the period of this Government.
Q167 Lin Homer: … I think the landscape has changed dramatically and we have some substantially greater powers now.
Q175 Lin Homer: …We have had 42 changes of the law that help clarify and close down attempts to broaden Parliament’s intention but more recently we have also brought in a couple of things … . But also some new approaches, the most important one of which I think is what we call accelerated payments, which change the balance of benefit from tax avoidance. People knew generally that by the time we got to tribunal we won most of our cases, but it was sometimes worth taking the risk simply for the delay…
Q205 Lin Homer: I am very confident that the powers we have been given are already allowing us to be much more successful. So, let’s be clear, our ability to bear down on avoidance and our ability to bear down on evasion are stronger now than they were even a few years ago. I am confident that with some of the new powers we have recently been given, and indeed with our stronger resources in Jennie’s area, we have around about 30,000 people in our business who spend their time pursuing compliance and I think we are already in a strong position and I am confident we can strengthen that further.
Q212 Lin Homer: … I have told you that we have significantly increased the number of our prosecutions. I could give you examples of small businesses as well as wealthy people that we have prosecuted, but that is not the only way that we persuade people to pay their tax, …
Q251 Lin Homer: … What I cannot do, because it is not true, is tell you that only rich people do evasion and avoidance. That is not true. …
Q176 Lin Homer: … What I think has happened—and I think you heard some of this in the evidence earlier today—is that there was definitely a culture in the mid-2000s when banks and other institutions were aggressively marketing avoidance schemes, and I think that has created an environment that we were not happy with.
A fivefold increase in prosecutions? Substantially greater powers with more resources? A stronger ability to bear down on avoidance and evasion than even a few years ago? This is not what campaigners wish the public to believe.
A great deal more remains to be done about tax avoidance and evasion. The Government is driving forward to do it.
My contribution to the back-bench debate on the subject, which I secured with Michael Meacher and Simon Hughes, is here. A recent article which I published in Business First Magazine may be found here on pages 20 and 21.
In a democracy, there will always be propaganda. However, the idea that this Government has been soft on tax avoidance and evasion is a nonsense which does not withstand serious scrutiny against the facts.