THE CHANCELLOR has waged war on tax avoidance following a recent outcry from the public over large corporate entities paying little or no UK tax.
In his Autumn Statement, George Osborne said that despite public sector cuts across the board, HM Revenue & Customs would receive £77m to expand its anti-avoidance and evasion activity.
"Any attempt to reduce tax evasion is to be welcomed," said Geraint Jones, tax partner at Reeves.
However, he added that compared to the US and Europe, the UK had a much lower tax evasion figure of about £32bn a year.
Changes to HMRC and agreements the UK now has with both the US and Switzerland are likely to bring in about £2bn a year in extra revenues from 2014/15.
The government is already investing £900m in HMRC to secure £7bn in revenues.
Funds from Switzerland account holders will make up £330m in the first year, £3.1bn in the second fiscal year, £610m in 2014/15 and then spike in 2016/17 at £920m, before reducing to £180m and £150m for the next two years, respectively.
Meanwhile, anti-avoidance will secure revenues of £15m next year, £200m the year after, £95m in 2014/15, £330m in 2015/16, £385m 2016/17, £355m 2017/18– a total of around £1.3bn in six years.
However, the message should not be misconstrued as making the UK anti-competitive, warned KPMG head of tax policy Chris Morgan.
"The chancellor is saying that the country is very much open for business and he wants the UK to have one of the most competitive tax regimes ... But you've got to play by the rules," he said.
Corporation tax will be reduced from its current 24% to 23% next year and a further reduction to 21% is coming in April 2014, with many speculating it will fall further in the years to come – to 20%, in line with VAT rates.
Although the chancellor is reducing corporation tax in the coming years, he announced that the introduction of General Anti-Abuse Rule (GAAR) legislation will come in during the next fiscal year.
Other measures Osborne announced in relation to anti-avoidance was that he would expand HMRC's Affluent Unit with 100 extra investigators, additional risk and intelligence staff, an increase in the number of persona tax inspectors to tackle offshore evasion, and create a new centre of intelligence within HMRC to bring together expertise.
HMRC would also be given £30m to improve its intelligence unit IT system, Connect, and will publish a Lifting the Lid on Tax Avoidance Schemes outline later this month.
Sign up for Financial Director email alerts
Please enter your email below to receive your profile link
Search by job title, salary, or location - we only list senior financial roles
This web seminar will explain how finance directors can monitor and understand the various financial costs of staff turnover, including logistical costs and the impact of lost productivity as new employees are brought up to speed
8.30am, 26 Jun 2014
Targeted at FDs and CFOs, the FD Conference 2014 provides a platform in which to learn from outstanding keynotes and network with like-minded peers
Send to a friend