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Osborne promises £10bn tax dodging clampdown

The chancellor says he will put more resources into fighting tax dodging as MPs criticise the tax man for being 'way too lenient'.

Osborne promises £10bn tax dodging clampdown

The chancellor George Osborne is throwing more money at tax enforcement in a bid to gain up an extra £10 billion in revenues from the wealthy and big business.

In response to the growing public outrage over tax dodging the chancellor will announce in his Autumn Statement on Wednesday that he will spend a further £154 million over the next two years on measures to increase the tax take from multinationals and wealth individuals with Swiss bank accounts.

He will stop the practice of ‘transfer pricing’ where companies use legal loopholes to transfer sales in the UK to another country with a more favourable tax regime.

The Treasury believes stepping up enforcement will bring in £5 billion by 2015 and another £5 billion will be collected from Swiss bank accounts of the wealthiest over the next six years.

The move comes as Osborne prepares to tell the country that the government has fallen behind on its plans to eliminate the budget deficit.

Osborne said: ‘The government is clear that while most taxpayers are doing their bit to help us balance the books, it is unacceptable for a minority to avoid paying their fair share, sometimes by breaking the law. We are determined to tackle this problem and HM Revenue & Customs (HMRC) is making good progress but we are giving them additional tools to bring in more.’

His comments follow public outrage at Starbucks which has paid just £8.6 million in tax in the past 14 years despite generating sales of £3 billion. The coffee chain is now said to be 'in discussions' with HM Revenue & Customs over its tax arrangements.

Similarly, online retailer Amazon generated £3 billion of sales in the UK in 2011 but has paid no corporation tax.

A report by MPs on the Committee of Public Accounts has criticised HMRC and called for a 'change in mindset' towards corporate tax collection.

Margaret Hodge, chair of the Committee of Public Accounts, said: ‘The inescapable conclusion is that multinationals are using structures and exploiting current tax legislation to move offshore profits that are clearly generated from economic activity in the UK.’

She added: ‘HMRC should be challenging this but its response so far to these big businesses and their aggressive tax planning has lacked determination and looks way too lenient. Policing the tax system must be at the heart of what HMRC does.’

‘We consider that paying an appropriate amount of tax in the country in which profits are made is not only a matter of basic economics, it is also a matter of morality,’ said Hodge. ‘The UK should be taking the lead in making this point.’

Matthew Sinclair, chief executive of lobby group TaxPayers’ Alliance, said it was natural for taxpayers to be angry but that an overhaul of the tax system was needed to make it fairer and more effective. 'Draconian punishments for arrangements which the law doesn’t specifically prohibit would be unjust and impractical. If politicians are serious about doing something then they need to reform the tax system.’

3 comments so far. Why not have your say?


Dec 03, 2012 at 21:43

Unfortunately a lot of these tax teams end up "consulting" for the big boys which some, more cynical than I, might say for services rendered. I recently read that some of these new teams will be chasing publicans and contractors as a first step ?? If true already they have lost direction before then even start chasing butterflies whilst elephants are rampant. It's going to be another expensive tame task force similar to the Police "ill gotten gains" recovery team that cost more than they ever recovered. Yet more highly paid civil servants twiddling their thumbs waiting their gold plated pensions.

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mr rowe

Dec 04, 2012 at 10:31

Yeah right, if you are not a multinational or super rich then you can expect nothing but overwhelming compulsion and prejudice when dealing with the revenue. The small guy is an easy target and will continue to be the prey.

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Graham Barlow

Dec 04, 2012 at 10:48

The way Profits are computed by multi national companies operating in the UK is a massive advantage to them over the small national company paying profits Tax in the UK, The medium size UK company has no opportunity to siphon off income by way of overseas management charges or special fee structures payable to Dutch parent companies and the like. This enables the multi national to apply competetive pressure on the smaller Tax paying company, and poach their experienced staff with higher salaries. In other words the British Tax system favours the foreign controlled company at the expense of the indigineous entrepruneur(Tax Payer) We have blatant proof of this state of affairs, and all our Politicians can attempt to do is shame them into paying. Frankly it is laughable. There are dozens of abuses that are currently going on all legal!

ajor take-overs where the interest borrowings finacing the deal are off-set against the UK profits. Takeovers wghere the profits are spirited off shore with Head office management charges, How can you turnover £1 Billion , and only be due to pay £2 mil corp Tax? This is one at random I have just looked up on my computer/ Perhaps they should give me a job and get me to come out of retirement.

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