Coalition gets tough on tax avoidance of the wealthy

Nick Clegg backed away from the Liberal Democrats' plans for a mansion tax yesterday as he joined David Cameron in promising a government crackdown on tax avoidance.

The Deputy Prime Minister is pressing for more taxes on the very rich to allay public fears over the Coalition's spending cuts. But his caution over Liberal Democrat proposals for a tax on homes worth more than £2m reflects opposition to the move from George Osborne. Instead, the Chancellor is expected to use his March Budget to close tax loopholes exploited by wealthy individuals and companies – including people who avoid stamp duty on their homes. He is likely to announce Britain's first "general anti-avoidance rule".

Liberal Democrat sources denied Mr Clegg had abandoned his support for a mansion tax but admitted he could not commit the Coalition to introducing one.

They said the Deputy Prime Minister would insist that Mr Osborne imposes new taxes on the rich if he scraps the 50p rate of tax on earnings above £150,000 a year. However, abolishing the top rate now looks increasingly unlikely as it would fuel Labour claims that the Tories are "the party of the rich".

Mr Clegg told BBC Radio 4: "I think there are millions of people... who pay their taxes, who work hard, who aspire to do the right things for themselves and their families, who are quite rightly angered there is a wealthy elite of large businesses who can pay an army of tax accountants to get out of paying their fair share of tax. They basically see paying tax as an optional extra, they pick and choose the taxes you pay. There should be a general rule that you can't play the system, you can't abuse the system."

Yesterday Mr Cameron pledged a "tougher approach" towards large companies employing "fancy corporate lawyers" to keep down their tax bills.

David Gauke, the Treasury minister, said: "People buying high value properties must pay their fair share. We're looking at this area to see what can be done."One dodge is for properties to be placed in an offshore company, allowing owners to escape stamp duty because the company rather than the house can be sold.

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