Posted on 20 February 2015
With less than eighty days to go to the election, Ed Miliband has promised there will be an immediate, independent ‘root and branch’ inquiry into the culture and practices of HMRC if Labour forms the next government.
So, what exactly is going to be under review?
‘Practices’ - the formal processes for managing the investigation of tax avoidance and evasion cases, how decisions about legal action are taken, and resource prioritisation for tax compliance work.
‘Culture’ - the focus of HMRC’s leadership on tax avoidance and evasion, the relationship between HMRC and those under investigation, and the role of intermediaries.
The proposed review, which would focus on HMRC’s attitude and response to tax evasion and aggressive tax avoidance, would have full investigatory powers and support from the Treasury and would commence immediately after the general election reporting directly to the Chancellor within three months, before the end of July 2015.
Additional Labour measures to tackle tax avoidance also include 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; and making country-by-country reporting information publicly available.
Miliband’s speech also referenced a number of areas of legislation to be introduced in a first Labour Finance Bill including penalties for those who are caught by the General Anti-Abuse Rule; closing loopholes such as those used by hedge funds to avoid stamp duty and the Eurobonds loophole which allow some large companies to move profits out of the UK and avoid Corporation Tax.
Labour also intends to legislate to stop umbrella companies exploiting tax reliefs and will tackle disguised self-employment by introducing strict deeming criteria, as well as requiring dormant companies to report more frequently.
The party said it will scrap the ‘Shares for Rights’ scheme which will allow HMRC to better focus on tackling tax avoidance.
Miliband concluded his speech by saying: ‘It doesn’t matter how much I get attacked for this, I’m not backing down. A Labour government led by me will ensure that the same rules apply to everyone, not matter how rich or how powerful they are.’