All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

10 ways UK Labour plans to cut tax evasion and avoidance

Unveiling a plan to tackle tax avoidance and evasion, Ed Balls, the shadow chancellor of exchequer, said the issue will be at the top of a new Labour government's to-do list.

Balls said yesterday that if Labour wins the general election on May 7, he wanted to see, on the first day of government, "a draft Finance Bill which is an Anti-Tax Avoidance Bill" and a report from HM Revenue & Customs about what it was doing to tackle tax avoidance and evasion so Labour's already-announced inquiry into how HMRC operates could begin immediately. He added that he would also ask the Bank of England to focus on what impact risks from the informal economy, including avoidance, evasion and the tax gap, would have on delivering its financial stability objective.


The shadow chancellor said the 10-point planwould target the Treasury and HMRC with cutting avoidance and evasion by at least £7.5 billion ($11 billion) in each year of the next parliament (2015 - 2020). Labour's first Finance Bill will include the measures to implement the plan.


Tax has become a central issue in the UK general election campaign, as political parties strive to convince voters they will be tough on companies and individuals who do not pay what is due.


Labour's plan to tackle tax avoidance and evasion would, for example, abolish the rules allowing some UK residents to be domiciled outside the UK for tax reasons so they do not have to pay tax on their foreign income, though introducing a temporary residence rule in the UK for a short period of time, such as university students; reform rules allowing private equity managers to pay capital gains tax rather than income tax; compel the UK's Overseas Territories and Crown Dependencies to produce publicly available registers of beneficial ownership; increase penalties for tax avoidance and make country-by-country reports, which are being introduced as one of the results of the OECD-led base erosion and profit shifting (BEPS) project, publicly available.


The Conservatives responded on Twitter to the Labour announcement, arguing that it had taken action on many of the elements of the plan.


Labour tax avoidance package mainly things we have already done: GAAR penalties, ending disguised self employment, OTs and CDs etc

— Tory Treasury (@ToryTreasury) April 11, 2015 The Labour party plan in full: Abolish the non-dom rules so that wealthy people are not able to use loopholes to avoid paying tax, while introducing a temporary residence rule for those genuinely in the UK for a short period of time, such as university students. Re-write the rules which allow private equity managers to get away with paying less tax than ordinary working people even when they have not been investing their own money Close loopholes used by hedge funds to avoid stamp duty Force the UK’s Overseas Territories and Crown Dependencies to produce publicly available registries of beneficial ownership Increase penalties for tax avoidance including new penalties for those who are caught by the General Anti-Abuse Rule Close loopholes like the Eurobonds loophole which allow some large companies to move profits out of the UK and avoid Corporation Tax Scrap the “Shares for Rights” scheme, which the OBR has warned could enable avoidance and cost £1bn Tackle disguised self-employment by introducing strict deeming criteria Tackle the use of dormant companies to avoid tax by requiring them to report more frequently Make country-by-country reporting information publicly available Christian Aid, the development agency, said it supported Labour's plan of action against avoidance and evasion. However, it wanted to see more help for developing countries in the plan. “We are extremely heartened to see Labour’s commitment to the sort of reforms that will roll back some of the deeply immoral tax dodges exploited by many companies,” said Christine Allen, Christian Aid's director of policy and public affairs. “The manifesto includes some of the most vital tax fairness reforms, for which we have campaigned for years. We especially welcome the pledge to draft an ‘Anti-Tax Avoidance Bill’ on day one of a Labour Government. This sounds a lot like the Tax Dodging Bill for which we and many others are campaigning. “However, we would like to see stronger action in relation to developing countries, which lose more to tax dodging by multinationals than they receive in aid.”

more across site & bottom lb ros

More from across our site

The UN may be set to assume a global role in tax policy that would rival the OECD, while automakers lobby the US to change its tax rules on Chinese materials.
Companies including Valentino and EveryMatrix say the early adoption of EU public CbCR rules could boost transparency of local and foreign MNEs, despite the short notice.
ITR invites tax firms, in-house teams, and tax professionals to make submissions for the 2023 ITR Tax Awards in Asia-Pacific, Europe Middle East & Africa, and the Americas.
Tax authorities and customs are failing multinationals by creating uncertainty with contradictory assessment and guidance, say in-house tax directors.
The CJEU said the General Court erred in law when it ruled that both companies benefitted from Italian state aid.
An OECD report reveals multinationals have continued to shift profits to low-tax jurisdictions, reinforcing the case for strong multilateral action in response.
The UK government announced plans to increase taxes on oil and gas profits, while the Irish government considers its next move on tax reform.
War and COVID have highlighted companies’ unpreparedness to deal with sudden geo-political changes, say TP specialists.
A source who has seen the draft law said it brings clarity on intangibles and other areas of TP including tax planning.
Tax consultants say companies must not ignore financial transactions in their TP policies as authorities, particularly in the UK, become more demanding.