Tax Avoiders Should be Named and Shamed, Says UK Watchdog
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Britain’s tax agency should name and shame individuals and companies who use legal loopholes to avoid paying tax, said a UK spending watchdog, warning that the taxman is losing the “game of cat and mouse” to elaborate tax avoidance schemes.
According to the UK’s Public Accounts Committee, HM Revenue and Customs (HMRC) is missing out on approximately £5 billion ($7.8 billion) a year because the taxman is failing to crack down on “morally wrong” tax avoidance schemes.
Britain’s tax agency should name and shame individuals and companies who use legal loopholes to avoid paying tax, said a UK spending watchdog, warning that the taxman is losing the “game of cat and mouse” to elaborate tax avoidance schemes.
According to the UK’s Public Accounts Committee, HM Revenue and Customs (HMRC) is missing out on approximately £5 billion ($7.8 billion) a year because the taxman is failing to crack down on “morally wrong” tax avoidance schemes.
The PAC report, published on Tuesday, said the HMRC had an “appallingly bad record” at catching tax cheats, having fined just 11 people for promoting tax avoidance since 2004 – despite 10,000 people a year coming forward to report tax avoidance schemes. The 11 tax avoidance promoters were fined just £5,000 each despite the maximum penalty being £1 million, the report said.
“The number of cases HMRC takes to court is tiny compared to the overall caseload. It must make use of the additional resources it has been given to act much more urgently to investigate and close down new schemes and to bring more cases to court,” said the PAC.
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Margaret Hodge, chairwoman of the PAC, called on the tax agency to “get more robust in its approach” as well as consider “naming and shaming” tax avoiders and businesses behind the tax avoidance schemes.
“It is a game of cat and mouse and HMRC is losing,” Hodge said, adding that the complexity of tax law creates opportunities for avoidance.
However, Chas Roy-Chowdhury, head of tax at the Association of Chartered Certified Accountants, cautioned that naming and shaming is a dangerous game to play.
“Where do you draw the line?” he told the BBC.”There isn’t a clear cliff edge between what you could say is acceptable tax planning and what is unacceptable tax avoidance. I think there’s some difficulty in terms of where do you pitch it in terms of where you name and shame.”
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Although the PAC report is largely focused on schemes aimed at wealthy individuals, its findings come at a time when the amount of tax that multinationals pay in Britain has become a sensitive issue after it was shown that companies such as Starbucks, Amazon and Google have been using legal loopholes to sharply cut their tax bill.
Britain, Germany and France called for a crackdown on tax avoidance by multinational companies at the meeting of the G20 in Moscow last week, and London plans to make the issue a centrepiece of its presidency of the G8 group of nations this year.
Speaking at the start of his three-day trade tour of India, British Prime Minister David Cameron acknowledged that “some forms of tax avoidance have become so aggressive that there are moral questions that we have to answer about whether we want to encourage or allow that sort of behaviour”.
However, Cameron warned that it would not be easy to legislate on the issue.
[quote] Some would say ‘Just change the law to make aggressive avoidance illegal’, but, with respect to my friends in the accountancy profession, it is difficult to do that. [/quote]
