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News briefing, 24 May 2013
Our weekly comments on tax stories by the national press
Avoidance & evasion
HMRC could gain access to overseas bank accounts of all UK taxpayers – to check they are not hiding money from the Revenue – under a Europe-wide agreement set out by the prime minister, David Cameron
Telegraph
It is increasingly difficult for individuals to escape paying tax on income secreted abroad, as more and more countries, including so-called tax havens, sign up to automatic exchange of information agreements with the UK.
HMRC have stepped up their crackdown on tax evasion by publishing a second online list of deliberate defaulters
Financial Times
Controversial though the introduction of this legislation was, individuals and businesses that have evaded at least £25,000 of tax could find their details posted on the next list the Revenue uploads.
Tax avoidance by global firms costs each British taxpayer £183 a year, according to analysis of company accounts, regulatory filings and HMRC data.
Mirror
The paper would only have had access to the most general of HMRC information, and it is not possible to calculate the correct tax liability from the published company accounts. Tax campaigners love to put figures on tax avoidance because they know it gets headlines; by the very nature of the issue, such numbers are not worth the future fish ‘n chip wrappers they are printed on.
The CBI and some of Britain's largest multinational corporations have urged David Cameron to rein in his rhetoric on tax avoidance ahead of next month's G8 summit.
Guardian; Telegraph; Guardian; Telegraph
It certainly is time tax avoidance was tackled. A resolution will probably demand international cooperation, and it should be based on informed comment rather than gut reaction. Campaigners also have to realise that measures will take time to agree and even more time to implement.
The backlash against corporate tax avoidance could end up costing the UK jobs and investments, according to the Exchequer secretary to the Treasury, David Gauke.
Financial Times
The present corporate tax regime, with its relatively low rate and incentives for activities such as research and development, is attractive to international firms – but they may worry that politicians share the current popular belief that global companies avoid tax. Businesses like certainty and will be put off the UK if they suspect adverse changes are in the pipeline.
Money hidden from the public purse in offshore tax havens amounts to £99bn a year, according to Oxfam.
Guardian
It is not possible to accurately estimate income that is deliberately being hidden. The figure of £99bn supposedly represents the potential income tax from concealed capital, which is estimated at £12.8tn. Only concerted international cooperation and tax information exchange agreements – or more leaked data – are likely to shed real light on the subject.
Corporation tax
Large European companies will be forced to disclose the amount of tax they pay in each country in which they operate.
Times
Banks in European Union member states are going to have to publicise the amount of tax they pay – and it seems the European Commission is going to extend the obligation to other major businesses. The effect is difficult to foresee, although many advisers and companies are coming to the conclusion that they are going to have to do something to appease public indignation about perceived tax avoidance.
An independent Scotland would undercut the rest of the UK on corporation tax, according to Scottish first minister Alex Salmond.
Telegraph
Companies should wait for the outcome of the Scotland independence referendum in autumn 2014 before rushing to relocate north of the border.
Income tax
The Surrey borough of Elmbridge is the biggest payer of income tax in the UK, with an average annual bill of £16,100, more than three times the national mean, according to accountancy group UHY Hacker Young.
Independent; Times
In a capitalist society, there will be winners and losers, and the winners will mostly be well-educated two-earner families, particularly if they are employed in London. They will gravitate to the leafy suburbs to bring up their 1.8 children, meaning the areas will have the highest tax bills. And the biggest house prices.
Policy
Corporation tax should be cut to 10% and the tax code reformed to force foreign companies to contribute the same as UK firms, according to the Free Enterprise Group, which is backed by 40 senior Conservatives.
Telegraph
The government is not in a position to make the suggested reduction – which would jar with individual taxpayers who pay income tax of at least 20%.
Tax breaks for the self-employed should be abolished because they represent an open invitation to abuse, according to the think-tank CentreForum.
Telegraph
The self-employed have long enjoyed beneficial tax status compared with their PAYE counterparts. There have been many cases in which HMRC have disputed a self-employed status because of the advantages it brings.
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