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George Smid, Liberal Democrat Candidate for South Holland and the Deepings, says: We will continue to tackle Tax Dodging

April 18, 2015 11:29 AM
By George Smid - PPC for South Holland and the Deepings
Originally published by East Midlands Liberal Democrats

George SmidI want a tax system that is simple, competitive and fair. The vast majority of people and businesses in the UK pay their taxes on time and in full, but there are always some who try to get away without paying their fair share. This is morally wrong and damages our economy and public finances.

That's why I'm pleased that Liberal Democrat Chief Secretary to the Treasury Danny Alexander has made tackling tax avoidance a top priority and has made progress on many of the issues you raise. Since coming into Government in 2010 he has led a crackdown on tax avoidance and evasion that is closing loopholes and making more people pay up.

Liberal Democrats in Government have already made over forty changes to the law to close loopholes and make big strategic changes to the way tax is collected to ensure fewer people slip through the net.

The changes we have made include the introduction of a General Anti-Abuse Rule (GAAR); strengthening the Disclosure of Tax Avoidance Schemes (DOTAS) regime; introducing a tougher monitoring regime and penalties for high-risk promoters of tax avoidance schemes; giving Her Majesty's Revenue and Customs (HMRC) the power to collect disputed tax bills up front (thus removing the incentive for tax avoiders to delay and frustrate HMRC's efforts to settle disputes); and clamping down on Stamp Duty tax avoidance with a new range of measures.

Another big change was to invest almost £1bn in HMRC to tackle tax avoidance, recruiting 2,500 extra members of staff to work on tackling tax avoidance and opening a new Large Business Directorate last year to deal specifically with the tax affairs of the 2,100 largest firms in the UK. Part of their work will be to enforce the new Diverted Profits Tax, which will counter the use of aggressive tax planning methods used by some big firms to divert their profits to areas with very low rates of tax. We hope this tax will yield an extra £1.35bn over the next five years.

I'm pleased that we have also worked internationally to tackle tax avoidance and that this was one of the main goals of the UK's presidency of the G8 group of nations. During our presidency, we won G8 agreement on transparency on the real owners of businesses, as well as getting the Organisation for Economic Cooperation and Development (OECD) to develop a country-by-country reporting template for multinationals to report profit and tax information. Over 90 countries are signed up to the new International Comprehensive Report Standards, closing down options for tax cheats, while around £2bn in previously unpaid tax has been brought in from our new agreements with Switzerland and Lichtenstein alone.

There is clearly much more to do at home and abroad, but I am proud of the work that Liberal Democrats have done in Government to close loopholes and force tax cheats to pay more of their fair share. Thanks to the steps we have taken, the tax yield for this year will be around £9bn more than when we came into Government in 2010.

We believe there's no need for a specific tax dodging bill because we've already made big strides in this area as described above. Thanks to the £1bn investment we've made in HMRC, we've brought in over £100bn in additional tax revenues over the course of this Parliament. Obviously, we're not going to let up on this fight and we want to spend another £6bn on tackling tax avoidance and evasion while we finish the deficit reduction job.

Going forward, Liberal Democrats are determined not to let up in the fight against tax cheats. If we are in Government again our aim is to make progress on this agenda in every Budget and Autumn Statement of the next Parliament. We will continue to invest in HMRC, as we have done in Government, to enable them to do more to tackle tax evasion and avoidance. We will also introduce a range of other measures, including a General Anti-Avoidance Rule, which goes much further than the current anti-abuse rule. We will seek to extend the requirement for country-by-country reporting from banks and extractive industries to cover all UK listed companies. The majority of these proposals will be introduced through the annual Finance Bill, allowing us to take regular action throughout the Parliament.

I was shocked to hear media reports earlier this year claiming that HSBC helped thousands of wealthy clients avoid tax from countries all over the world.

However, since 2010, the Government has closed many of the loopholes exposed in the report and specifically taken action to get back money lost in Swiss bank accounts.

HMRC has systematically worked through all the HSBC data that it has received and has brought in more than £135m in tax, interest and penalties from tax evaders who hid assets in Swiss HSBC accounts.

HMRC received information on HSBC under very strict conditions and has therefore been unable to seek prosecution for other potential offences, such as money laundering. However, French authorities have said they will provide all necessary assistance to allow HMRC to exploit the data it already has to the full.

We have introduced a new tax - the diverted profits tax - to crack down on the use of artificial arrangements used by multinational companies to divert profits away from the UK. From April 1 2015, the tax came into force with a 25% rate. It will be used to counter the aggressive tax planning techniques used by some big global firms to divert profits to areas with very low rates of business taxes. We have forecasted that this tax will raise over £1.35 billion up to 2019/20.