In breaking news, Labour has published a bold list of the measures the party will take in government to tackle tax avoidance and evasion, to ensure that the UK will be a country that works for the many and not just a few.
The Party announced:
Labour to crack down on tax dodgers and introduce ‘Robin Hood Tax’ to fund Britain’s public services
Labour will undertake the biggest crackdown on tax avoidance in this country’s history, and introduce a ‘Robin Hood Tax’ on financial transactions as part of its plan to build a Britain for the many, not the few.
Labour’s plans will create a fairer tax system and raise billions in extra government revenue to fund Labour’s plans to invest in our public services after years of Conservative cuts.
These measures include:
- Labour will hold a Public Inquiry into the Panama Papers leaks
- Labour will force MPs to declare shares they hold in offshore accounts
- Labour will set up Special HMRC Tax Unit dedicated to investigating MPs & Lords tax affairs
- Labour will levy a new “withholding tax” levied on abusive tax havens & taxed at source
- Labour will force large firms to lodge their tax returns publicly to aid public scrutiny
- Labour will set up a new public file on the tax returns of all individuals earning more than £1m
- No public contracts for tax avoiders. Any firm bidding must publish their last 5 years’ returns
- Existing public contracts awarded to firms based in havens will be repatriated to the UK
- New Register of Firms who bid for government contracts listing their tax records
- New Register that records the beneficial ownership of companies flushing out silent partners
- Register of Trusts, in particular offshore trusts such as those used by politicians recently
- Labour will work with banks to promote good corporate governance
- A General Anti-Avoidance Rule to prevent tax avoidance through loophole exploitation
- Labour will prise open the tax records of Crown Dependencies to make avoidance harder
- Create an Offshore Trusts Levy. This will capture purchases of UK property from offshore trusts
- Labour will clamp down on the use of Advanced Thin Capitalisation Arrangements (ATCA).
- Close the “Mayfair Tax” Loophole stopping individuals treating carried interest as capital gains.
The Tories have often promised to tackle tax dodging, but the only concrete step they take is to reduce corporate tax avoidance by cutting corporation tax, meaning their corporate backers avoid owing the tax in the first place.
By contrast, with this list Labour have laid out a bold programme of clear and concrete measures that will force companies currently exploiting schemes and loopholes in order to reduce their tax obligations to pay their fair share to the UK’s upkeep instead.
The vast majority of the items on the list are easily understandable even for financial laymen. However, a couple of items bear some explanation.
Thin capitalisation is a tax avoidance strategy whereby a (usually) multinational corporation borrows heavily compared to its share capital and offsets the cost of interest against its profits, to reduce its tax obligations. Advance Thin Capitalisation Arrangements are agreements between companies and HMRC on the levels at which they will offset debt interest against their profits – agreeing in advance how much they will reduce their tax burden. This is fraught with the risk of abuse as, for example, a company with an ATCA can claim the cost of interest it might not be paying.
The Mayfair Tax Loophole currently allows venture capitalists to pay extremely low rates of tax on the profits they gain from buying and selling companies. Tax campaigners have called it “Government-sponsored tax avoidance on a breath-taking scale” and it is estimated to cost the UK at least £700 million per year.
In short, Labour’s measures represent a solid and financially literate commitment to ensure that companies pay tax fairly on their profits.
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