Danny Alexander MP, Chief Secretary to the Treasury (CST), announced today that the Government will make £900m available over the spending review period to tackle tax avoidance, evasion and fraud.
In a speech at Liberal Democrat conference in Liverpool the CST said:
“Tax avoidance and evasion are unacceptable in the best of times but in today’s circumstances it is morally indefensible.
“Today I can announce that the Chancellor and I have agreed a package of new measures to crack down on tax avoidance and evasion.
“We will be ruthless with those often wealthy people and businesses who think they can treat paying tax as an optional extra. This will mean a crackdown on those hiding money offshore; a fivefold increase in prosecutions against those who evade tax; and rooting out 50p rate tax dodgers.
“By the end of the parliament, this package will bring in an extra £7 billion in tax.”
The text of a briefing note which puts more flesh on the bones of the proposals is below.
The CIOT has issued a press statement commenting on the proposals, from John Whiting, CIOT Tax Policy Director:
“All right-minded tax advisers will welcome this increased emphasis on tackling tax evasion. Tax evasion is not a victimless crime. Cheating the Revenue robs the Exchequer of the money the Government need to fund public services and makes us all suffer.
“The Chartered Institute of Taxation has long argued that more effort needs to be put into investigating and tackling people who seek to evade tax. Cutbacks at HMRC should not mean lessening of efforts to tackle evasion. Putting resources into pursuing newer forms of evasion such as cyber crime (or e-evasion) as well as the more traditional smuggling and hidden economy is sensible.
“We can also well understand the desire to further tackle avoidance – but that should be put into the context of all the changes made in recent years, including the disclosure regime and effective ‘Targeted Anti-Avoidance Rules’ (TAARs). Ever more complex rules risk becoming administratively burdensome for all concerned and even creating further loopholes. At the same time, a good deal of the supposed avoidance is dependent on obfuscation and concealment and is better classed as evasion.”
Briefing note on the proposals announced today by the CST
Tackling Tax Avoidance, Evasion and Fraud
The Government will make £900m available over the spending review period to tackle tax avoidance, evasion and fraud. This will send a clear signal that the spending review will be focused on fairness and deficit reduction; in this case through raising additional revenues from those who undermine the tax system and seek to avoid paying their fair share. The resources will:
Avoidance & Evasion
Make it harder for individuals and companies to avoid tax and working to prevent tax avoidance before it happens, ensuring the right and fair amount of tax is paid.
Funding will be available for:
• a much more robust criminal deterrent against tax evasion – HMRC will increase the number of criminal prosecutions fivefold;
• a crackdown on offshore evasion with the creation of a dedicated team of investigators to catch those hiding money offshore; and
• a much tougher stance on evasion and avoidance by those liable for the 50 per cent tax band.
Tax Debt
Reduce the amount of tax that is lost to the Exchequer each year through written off/bad tax debt.
Funding will be available for:
• Further investment in in-house collection capacity will increase HMRC’s internal debt collection rates
• Placing up to £1bn p.a. of tax debt out to private sector debt collection agencies.
• Use of the private sector will also improve HMRC debt collection techniques and capabilities through sharing knowledge and best practice.
Organised Crime/Tax Fraud
Organised crime and criminal attack is estimated to contribute around £5bn a year to the UK tax gap.
Funding will be available for:
• more registration checks to stop people claiming tax repayments when they are not due;
• cyber crime teams and specialists to help prevent criminal attack on HMRC’s electronic systems; and
• more investment in freight and detection technology to prevent alcohol and tobacco smuggling.
Spending Review Context
£900 million is ring-fenced to spend on specific measures to tackle evasion and avoidance and reduce the overall tax gap. This will be a key component of the Government’s commitment to delivering a fairer tax system.
HMRC will be expected to deliver administrative savings in line with all other government departments as part of the Spending Review process. Full details of HMRC’s Spending Review settlement will be released alongside all other departments on 20th October 2010.
- End of briefing note -
Posting by George Crozier, CIOT External Relations Manager, in Liverpool, 19/09/10
