Avoiding Avoidance

The UK government is slashing spending on vital public services and welfare, increasing poverty and inequality. At a time when vulnerable people are bearing the brunt of the cuts, the UK government is making it easier for multinational companies to cut their tax bills.

Every year the UK government loses out on £25 billion in revenue to tax avoidance by large companies and rich individuals. These tax dodgers act as giant parasites, sucking profits out and leaving the rest of society paying the price.

David Cameron and George Osborne have been talking tough on tax. But rather than making it harder for companies to avoid tax, this year the government is proposing new changes which would give a green light to companies to avoid paying billions in tax. The government’s plans wouldn’t even stop high profile corporate tax dodgers like Amazon, Google and Starbucks, the Student Loans Company, the BBC, the civil service, Jimmy Carr or Take That.

Our report, Avoiding Avoidance, shows that the government’s plans for new tax rules in the 2013 Budget defines tax avoidance so narrowly that it would widen perceptions of what is acceptable, giving a green light to companies to avoid tax. Instead we are calling for the introduction of a General Anti-Avoidance Principle that could recover £5.5 billion of the tax that is currently avoided each year.

The government has already changed the UK’s tax laws to make it easier for companies to shift profits through tax havens in an enormous tax giveaway to some of the UK’s largest companies. The changes in the Budget in 2012 watered down the UK’s anti-tax haven (or Controlled Foreign Company) rules, so that the UK’s tax rules no longer deter companies from using tax havens. This move alone is set to lose the UK government £1 billion a year, and developing countries £4 billion a year.

The government claims they are making tackling tax avoidance one of their top priorities. Instead they are building a tax system where only the little people pay.