A few points.
1) Tackling tax evasion and reforming the benefit system are not mutually exclusive. We have HMRC working on the former and the DWP working on the latter. We should not defend abusers of one system by seeking to divert attention to abusers of the other.
2) The overall scale of illegal tax evasion is wildly overstated by many commentators. [DLMURL="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/364009/4382_Measuring_Tax_Gaps_2014_IW_v4B_accessible_20141014.pdf"]HMRC figures[/DLMURL] produced to the same rules under both colour governments show the total tax gap (the difference between what they think is genuinely due, and what is actually collected) steady at about £34billion plus or minus £3billion for every year since fiscal year 2005/6. As a proportion of the total, it has fallen slightly from around 8.5% to about 6.8%.
3) Of that total, HMRC estimate that large businesses are responsible for £9.3bn, substantially less than the £15bn attributed to small and medium sized businesses. The balance is made up of criminal activity and individuals.
4) A powerful force in reducing corporate tax avoidance (thats the legal kind) is not aggressive enforcement, but the steady reduction in UK corporation tax rates. Most corporate tax schemes do not seek to avoid tax altogether, but to move it from a high tax jurisdiction to a low tax jurisdiction. Back in 2010, the UK corporation tax was 28% - one of the highest of the developed countries. (The US is nominally high, but so riddled with exemptions that the
effective rate is much lower). As the UK rate has been progressively lowered to 20% (now one of the lowest), the incentive to create tax avoidance schemes has reduced, and indeed may even have reversed, so multinationals may be moving profits into the UK to take advantage of the lower rate. As corporate structures move at least a year (and often 2 or 3 years) behind the tax changes, we may not yet have seen the full scale of the benefits of this. However, it is entirely possible (even probable) that in
the long run, the total tax take from the lower rate may exceed the take from the previous higher rate - bearing in mind the incentives to avoid the latter.
5) The directors of companies have a fiduciary duty to their shareholders to take all legal measures to maximise long term shareholder value. This includes taking professional accountancy advice to minimise tax liabilities, so long as this is within the law.
This last point resonates particularly strongly with me, as the director of a £multi-million company. Unlike many companies, my shareholders are not wealthy individuals, hedge-funds or any of the other political bogey-men. My shareholders are all either current employees, or recently retired employees of the business. And I can absolutely assure you that the lad in the warehouse who sold his motorbike to buy £1000 worth of shares, or the girl in the accounts team paying for her shares out of salary deductions, no more wants to share dividend income or capital gain with the chancellor than anyone else. Which is why they hold their shares in a government approved scheme which reduces their tax liability.
Does that make them part of the problem? Or part of the solution?
🙂
