Member Article

Cameron?s renewed focus on tax avoiders

The Prime Minister has told leaders at the World Economic Forum in Davos that businesses must pay their fair share of tax.

In his keynote speech, Mr Cameron set out the UK’s main priorities as trade, tax and transparency.

He called on the world leaders in attendance to help in the clamp down on the “travelling caravan of lawyers, accountants and financial gurus.”

The Prime Minister said: “Any businesses who think that they can carry on dodging that fair share or that they can keep on selling to the UK and setting up ever-more complex tax arrangements abroad to squeeze their tax bill right down.

“Well, they need to wake up and smell the coffee because the public who buy from them have had enough. And let’s be clear:Speaking out on these things is not anti-capitalism. It’s not anti-business.”

Despite the content of the speech, HMRC have yet to resolve some £20m of corporation tax owed by Starbucks.

Research from IT finance specialists Syscap suggests HMRC has used powers of distraint against 10,577 times in the year ending March 2012.

The distraint powers allows HMRC to seize a debtor’s assets, and Syscaps research suggested use of distraint has increased since the tax deferral scheme ‘Time to Pay’ peaked in 2009, at the height of recession.

In late 2012, the EU Commission anounced a series of proposals designed to tackle the “scandalous loss of much-needed revenue” and close loopholes that had become the “play-things” of tax avoiders.

The Commission also called for an end to tax competition between countries to provide the most benign tax environment for businesses.

Frances O’Grady, TUC general secretary, said: “Tax avoidance at a global level will not work unless the government takes tougher action closer to home. The UK remains a global leader for tax secrecy, both through the City and its crown dependencies around the world.

‘The government should start to close the UK’s multi-billion pound tax gap with a far tighter general anti-avoidance principle and minimum tax rates for those at the top so the super-rich begin to pay their fair share.“

John Cridland, CBI director-general, said: “The majority of businesses pay the right amount of tax, and for the small minority which do not, times are getting tougher, and rightly so.

“The CBI does not condone highly abusive avoidance schemes which serve no commercial purpose other than the minimisation of tax, even if they are legal.

“In some cases the tax system is lagging behind commercial reality, particularly around the taxation of the digital economy and transfer pricing. As the Prime Minister highlights, the UK needs to work together with other countries, including the G8, to change the rules where appropriate, so that they are fit for the global business age.”

Will the Prime Minister’s renewed focus on tax avoidance be good news for small businesses, in terms of competiveness, or could resulting measures end up damaging them? Let us know you thoughts in the comments below.

This was posted in Bdaily's Members' News section by Tom Keighley .