Extra inspectors recruited to target wealthy tax avoiders

Danny Alexander promises 'affluence team' as coalition tensions increase over 50p tax rate
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Indy Politics

Wealthy individuals who are avoiding the 50p income tax rate are to be targeted by 2,250 extra government inspectors in a crackdown to be unveiled at the Liberal Democrat conference today.

The Chief Secretary to the Treasury, Danny Alexander, will use a speech in Birmingham to reveal the plan to "scrutinise people in the high income bracket to make sure they are paying their fair share". The hunt for wealthy tax avoiders will heighten coalition tensions over the 50p tax band, which opponents claim is making Britain less welcoming to entrepreneurs.

In an exclusive interview, Mr Alexander said that one hundred of the new investigators would form an "affluence team" to crack down on the mega-rich – the 350,000 people in the UK whose personal wealth is more than £2.5m. Mr Alexander said: "We are keeping up the pressure on tax evasion and tax avoidance, on making sure that those with the broadest shoulders bear their fair share of the burden."

He said the clampdown on tax avoidance had been "driven forward" by his party, and would target "particularly people who might be eligible to pay tax at the 50p rate".

The measure, which will be implemented by HM Revenue & Customs within weeks and builds on a measure to target tax avoidance announced at last year's Lib Dem conference, will aim to bolster revenues raised from the 50p tax band, in a Lib Dem bid to see off Tory attempts to scrap the rate.

The top rate of tax, paid by those earning more than £150,000, is the subject of fierce debate among ministers, with Lib Dem leader Nick Clegg yesterday saying that scrapping it was "not going to happen" unless there was "significant progress" on tax breaks for those on lower and middle incomes.

Mr Alexander echoed his leader's words, insisting: "At this time, for our country, it is just so much the wrong priority. We are having to take some very, very difficult decisions that are affecting everybody in the country. We are all in this together, and that means particularly ensuring that those with the broadest shoulders bear the greatest share of the burden."

While the new "squeeze on the rich" pledge will be music to the ears of Lib Dem grassroots, it will irritate those in the Conservative Party who are lobbying Chancellor George Osborne to scrap the 50p rate and stiffen the Tory resolve against the Lib Dems over the economy.

In his interview, however, Mr Alexander made it clear that the Lib Dems could again join forces with the Tories in a coalition if the 2015 election resulted in a hung parliament. In comments likely to upset those on the left wing of the Lib Dems, Mr Alexander said Labour under Ed Miliband and Ed Balls lacked economic credibility.

Asked if he thought he could work with Labour in the event of another hung parliament, the Cabinet minister said: "I just think at the moment they are so utterly incredible, particularly on the economy. Right now I don't see how they are going to go into the next election with a credible position. If that changes, of course that would be very interesting."

He added: "All they seem to propose is spending more, which can't be the solution to the problems that we face. But that's an opportunity for the Liberal Democrats too, because I really think at the next election there's only going to be one progressive party that people can trust to run the economy and that's the Liberal Democrats."

In all, an extra 2,250 tax specialists, half new recruits, are soon to be appointed by HM Revenue & Customs. The crackdown is expected to rake in an extra £2bn this year, and is on track to raise an extra £7bn a year by the end of this parliament.

The new teams will be investigating suspected tax avoidance, evasion, and "boundary pushing", where the law is stretched to breaking point to cut tax bills. While avoidance is technically legal, the inspectors could uncover – and close – previously unknown loopholes which are being exploited.

However, a new book by a band of rising stars on the right of the Conservative Party, published this weekend, will increase pressure on David Cameron and Mr Osborne to scrap the 50p rate. After the Coalition, which calls for a "grid-map" to fight for an outright Tory win in 2015, says the top tax band should be reversed because it is "unlikely to raise any money". Mr Clegg will today vow to face down "ruthless" and "extreme" forces in the Tory Party, to protect the British people from right-wing policies that would widen inequality and benefit the rich.

But new polling evidence commissioned by Tory peer Lord Ashcroft reveals voters see Mr Clegg as a puppet, a chameleon or a drowning man.

Great timing

Nick Clegg's keynote speech to delegates risks being overshadowed by the latest wheeze from David Cameron's Big Society guru.

Steve Hilton, the shaven-headed policy adviser who pads shoelessly around No 10, is the driving force behind a campaign to "put the Great back in to Great Britain".

The campaign, to highlight the strengths of British business, culture and heritage, will be launched on Wednesday – the same day that Mr Clegg is due to close the Lib Dem conference in Birmingham.

Matt Chorley