3 Dec 2014 10:41am

Punish “grubby” avoidance industry, says Hodge

The “grubby industry” that designs and promotes large scale tax avoidance schemes should face criminal prosecution, says Margaret Hodge

The chair of the Public Accounts Committee said it is unfair that the law punishes those who use the schemes while “shameless tax advisers and promoters are making big bucks.”

“It is crazy that only those who put their money into tax avoidance schemes are properly punished, and not those who design, promote and sell them,” Hodge said.

“Inevitably, when we talk about tax avoidance the spotlight falls on the high profile cases, like Gary Barlow or Jimmy Carr, Starbucks and Amazon. But tax avoidance is not confined to a small number of wealthy companies and individuals — it is a whole, grubby industry.

Yesterday, Starbucks’ UK chief executive was criticised after he reiterated the coffee chain will not pay UK corporation tax for another three years. Starbucks faced backlash in 2012 when it was revealed to have paid only £8.6m on £3bn sales since it first entered the UK market. Mark Fox said he believed there was nothing “abnormal” about its tax planning.

Hodge continued, “One promoter brazenly told my committee that the sole purpose of his business was tax avoidance. That is simply unacceptable. We cannot have an industry in this country based solely on ripping off the public purse.

“There needs to be a powerful deterrent that says that if you are involved in designing, promoting or selling these products you will face criminal prosecution, you will be fined, and that fine will be big enough that it will seriously hit you where it hurts,” she said.

The former Labour minister has long been an outspoken critic of tax avoidance and has had representatives of the Big Four in front the PAC. PwC’s UK head of tax, Kevin Nicholson, has been called to appear before the PAC next week, as part of a larger inquiry into tax avoidance and related to the recent Lux-leaks scandal.

George Osborne is today expected to address the small amount of tax paid by technology companies the UK with the so-called “Google tax”, and measures to tackle off-shore evasion.

Raymond Doherty


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