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The government should look closer to home than offshore havens if it seriously intends tackling tax evasion, says a tax campaign group.
Two new consultation papers on tackling offshore tax evasion using both civil and criminal deterrents are running until 31 October. From next year tax havens such as Jersey and Guernsey have agreed to supply Her Majesty’s Revenue and Customs (HMRC) with details of UK residents holding accounts there.
Richard Murphy of the Tax Justice Network (TJN) welcomed the possible use of civil proceedings as well as criminal ones.
“This is great progress in situations where establishing criminal guilt is difficult, cases are complex and the time and costs needed for a successful prosecution are hefty,” he said. “Only in extreme cases involving stacks of cash, someone well known and an accountant, banker or lawyer are criminal proceedings likely.
“The government is correct to employ a dual criminal and civil approach to tackle tax evasion abroad, which we estimate at £5-6 billion annually.”
But this is considerably less than the £47 billion that TJN estimates is being evaded in the UK annually.
Murphy called for HMRC to be given more staff and resources to tackle evasion.
“We need 20,000 more HMRC employees. They will recoup much more than their wages if the government follows its overseas approach and instructs UK banks to tell HMRC which companies have accounts here and who is self-employed.
“With that one simple change then tax evasion would largely disappear, as a lot of people would know the data is there to be examined and they will pay up.”
The government has introduced a General Anti- Abuse Rule to tackle tax avoidance but this has been criticised by the TUC and others for being too weak. They say it will allow much tax abuse to continue, and are also concerned that the rule will be supervised by a new panel likely to be recruited from the tax departments of big business advisory firms – which were involved in drawing up complex tax avoidance schemes.
This week Murphy’s report for the PCS, the civil servants union, will argue that the numbers employed by HMRC should move back towards the 95,000 figure of 2005, when today it is falling towards 50,000.