Sunday, February 16, 2020

Promises To Tackle Tax Evasion Fall Flat

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A promise that cracking down on tax evasion through offshore havens would raise more than £1 billion has backfired.

The UK Treasury and HM Revenue & Customs launched an attack on taxpayers hiding their wealth in secretive offshore banks and financial institutions such as Switzerland and Liechtenstein several years ago.

The aim was to root out taxpayers evading the payment of what they owed to HMRC.

HMRC had whistle blowers helping by handing over bank data listing customers and details of their wealth, but still had problems tracking down the money and enforcing payment.

Now, the tax authority has told the Office of Budget Responsibility that the claimed £1 billion was not a feasible target and that only a third of the total has been raised – around £349 million a year.

Broken promises

The figure comes from a Freedom of Information request made by the Labour Party, which demanded to know how the tax campaign was going.

Labour shadow chancellor John McDonnell argued the government had not delivered on promises to deal with tax evasion.

“It’s not acceptable any longer for our public services to go on being underfunded, while the Tories refuse to take serious action to properly clamp down on tax avoidance and evasion,” he said.

A Treasury spokesman said that revenue of £175 billion had been recovered since 2010 – an average of £250 million a year.

Special deals

Taxpayers were offered special deals to bring their tax affairs up to date, which included low or zero rate tax and reduced penalties for failing to file accurate returns.

However, the UK has led calls for more countries to swap tax data around the world.

The Common Reporting System is moving into gear with more than 100 countries agreeing to tell tax authorities in other countries details of their nationals holding offshore accounts.

Britain has also set up a similar program for taking in data about tax haven clients in the Isle of Man, Channel Islands, Gibraltar, British Virgin Islands and Cayman Islands.

The US has a similar program – the Foreign Account Tax Compliance Act (FATCA) – that demands overseas financial institutions hand financial information about their American customers to the Internal Revenue Service.

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