15 May 2013 02:39pm

"Sea change" on tax avoidance

There has been a definite “sea change” and a "clear break" from a culture of aggressive tax avoidance, according to Frank Haskew, head of the tax faculty at ICAEW

Speaking yesterday before the House of Lords Economic Affairs Committee, Haskew said that avoidance has reduced in the last ten years, citing various factors including the introduction of anti-avoidance legislation in finance bills, the banking code of conduct, and HMRC becoming much more aggressive in taking cases.

He added that the incoming General Anti-Avoidance Rule (GAAR) will have success dealing with more aggressive schemes, although it will struggle to get the “whole picture”.

Chas Roy-Chowdhury, head of taxation at ACCA, agreed that avoidance had decreased in the corporate sphere, as they “don’t have time to mess around” with complex schemes.

The group, which also included Richard Woolhouse, head of tax and fiscal policy at the Confederation of British Industry, were called to discuss the chancellor’s proposal that tax avoiders should be named and shamed, the Public Accounts Committee findings and whether a new approach on taxing corporations is needed.

On whether George Osborne’s plan to name and shame people in to paying their tax was a positive policy, Roy-Chowdhury warned that the government has to be “very careful”, specifically on classification.

Haskew said that over the last couple of years he has a seen an increase in the number of dubious avoidance schemes being promoted, and suggested that “some sort of register” for the promoters would be in the public interest.

He also denied HMRC was “a soft touch”.

“We have 93% tax revenues come in with little effort. The NAO report was right. We have to give time to see improved governance.”

The current cuts to the HMRC have gone "too far", said Roy-Chowdhury. "We need to spend to save".

On the PAC, Woolhouse argued, "We're hauling businesses through court of public opinion for paying low taxes for perfectly valid, legal reasons."

Roy-Chowdhury said we are “moving away” from corporation tax, suggesting in future the government could be relying more on other, indirect, taxes such as VAT and stamp duty.

Earlier John Bartlett, group head of tax at BP, said a unitary tax system would “put fear” in to businesses as it would need complete international compliance and introduce “great uncertainty” in to the system.

Raymond Doherty


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