Who will close the tax loopholes?

 

Share

The Prime Minister wants EU leaders to unite against global companies who evade tax, and says the G8 Summit, to be held in Northern Ireland in June, will mark a "turning point" in his campaign. Few voters would disagree with his intentions, especially married couples. Research carried out by the Christian charity Care recently indicated that a married couple with two children, where one parents works, will be paying 42 per cent more in tax in Britain than in comparable economies. The Chancellor regularly promises tax breaks for married couples, but they seem as unlikely as Mr Cameron's dream of wringing billions from corporate tax evaders.

How can the Government clamp down on the likes of Google, Amazon and Starbucks when the accounting firms used by these companies actually second staff to advise the Treasury on new tax legislation?

The Public Accounts Committee is outraged, and its new report on the Big Four (Deloitte, KPMG, PwC and Ernst & Young, who carry out the audits for 95 per cent of the FTSE 350) says this constitutes a conflict of interest and should be banned. The accountants talk about "the positive contribution of tax advisers to the efficient operation of the tax system", but to quote Mandy Rice-Davies, they would say that, wouldn't they? The Big Four employ 250 experts advising clients on "transfer pricing", moving profits from one country to another to reduce tax. HMRC has only 65 staff to outwit them. There is no level playing field when it comes to paying tax in this country. Quite simply, the more you can afford to pay a financial adviser, the less you will pay in tax.

Only the other week, we heard the energy giant NPower admit it hasn't paid corporation tax in the UK for three years, in spite of inflicting massive price hikes on consumers and amassing profits of £766m. Naturally, the company claims this money was soaked up in "development".

While multinationals legally avoid paying millions, HMRC is aggressively targeting small businesses, publishing lists of grocers, builders, knitwear manufacturers and hairdressers who owe relatively small sums, nearly all under £55,000. The Crown Prosecution Service has also stepped up the attack, aiming to increase prosecutions for tax evasion fivefold, but a year after The Times reported that 500 Britons had failed to disclose they had HSBC bank accounts in Switzerland, only one had been prosecuted for tax fraud.

Tax evasion costs the Treasury an estimated £14bn a year (£769 per family) – it's a battle between David and Goliath – the Revenue won 51 out of 60 court cases since April 2010, but has 1,000 more cases under investigation. There's a very simple way to end this cat and mouse game, to reduce the obscene growth in highly paid experts who create tax law and then tell other clients how to work around it (a bit like the weapons experts who design missiles and the shields customers had to buy to repel them)- and that's make tax so simple a child of four could understand it. HMRC has a terrible track record for dealing with the public, and is closing 281 face-to-face inquiry centres.

Last year, the National Audit Office found that 50,000 daily phone calls to HMRC (around 25 per cent) went unanswered, and more than six million people were kept on hold for longer than 10 minutes, so that doesn't bode well for the future.

Along with VAT and income tax, council tax evasion costs a fortune. Eric Pickles has just admitted that arrears in England amount to £2.4b, an average of £102 per household. In the US, property tax and personal tax is simple and unavoidable. We have a system so labyrinthine that it has created a feeder industry of advisers, which even the Government is forced to employ.

Isn't the solution to get back to basics? To stop waffling about mansion taxes and second home taxes, and start imposing a no-nonsense simple annual property tax, together with tax that is deducted from all income at source, as it is in Australia? If you disagree, then you can claim it back afterwards. But MPs whose own expenses system allows them to minimise tax through second homes and perks like partners on the payroll, are not going to be the people to start excising the rot from our tax system.

Marriage lines

I'll be watching episode two of Paula Milne's new BBC2 series, The Politician's Husband, in spite of the annoying voiceover. In spite of the fact the whole enterprise is so smugly middle class, so pleased with itself, and – most important of all– in spite of the fact that David Tennant, offering a limited range of facial expressions, is totally unconvincing as a would-be party leader. I'll be watching because I'm really interested in how his marriage to Freya, the newly promoted cabinet minister, survives. As a drama about politics, it isn't a patch on the exuberant brutality of The Thick of It (even though Thick's resident wet, Roger Allam, pops up here with a new tough personality as a nasty chief whip) or the sublime House of Cards, recently remade with a US setting, starring Kevin Spacey. As a dissection of a marriage, it's riveting.

Real politics

Real politics turns out to be far more brutal than anything in Milne's tasteful enterprise. Charles Moore's new biography of Maggie Thatcher reveals that one brave man – her policy adviser Sir John Hoskyns – wrote her a blistering memo entitled "Your political survival" and popped it in her red box before she went on holiday in August 1981. Utterly candid and breathtakingly direct, it contained such gems as: "You must make the members of your team feel 10 feet tall, not add to their human fears and self-doubts … You criticise colleagues in front of each other … You are too ready to blame others when things go wrong … You have an absolute duty to change the way you operate." Not surprisingly, he left the job a few months later.

Planet Margarget

I met Princess Margaret once, at a theatre opening. She arrived, swathed in brocade, like a galleon in full sail, ignoring the lower orders (that's me). Over the years, there have been various attempts to persuade us that she was "fun". Now, newly released documents reveal the full extent of her cossetted life. When the Princess was scheduled to visit the island of Mauritius in 1956, officials wrote to the governor explaining she liked "simple" meals, of just three or four courses at lunch and just five for dinner... and she preferred wine to champagne. I am sure that put the natives at their ease, and also explains why she was quite so broad across the beam in later years. I'm reminded of Princess Diana's stated wish "to live a simple life" post divorce: she combined visiting Mother Teresa with jaunts around St Tropez on a millionaire's yacht.

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Guru Careers: Software Developer

£35 - 40k + Benefits: Guru Careers: We are seeking a Software Developer (JavaS...

SThree: Trainee Recruitment Consultant / Resourcer

£18000 - £23000 per annum + Commission: SThree: As a Trainee Recruitment Consu...

Ashdown Group: UI Developer - (UI, HTML, CSS, JavaScript, AngularJS)

£25000 - £40000 per annum: Ashdown Group: UI Developer - (UI, JavaScript, HTML...

Day In a Page

Read Next
The PM proposed 'commonsense restrictions' on migrant benefits  

So who, really, is David Cameron, our re-elected ‘one nation’ Prime Minister?

Andrew Grice
Time travel: Thomas Cook has been trading since 1841  

A horror show from Thomas Cook that tells you all you need to know about ethical consumerism

Janet Street-Porter
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern
Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

Paul Scholes column

Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?