‘Get tough’ on firms’ tax avoidance

Mr Cameron said the Government was considering introducing new powers to prevent tax avoidance by big firms and the wealthiest individuals.

His comments came as Deputy Prime Minister Nick Clegg said he was urging Chancellor George Osborne to include anti-avoidance measures in this year’s Budget.

Mr Clegg said millions of voters were “quite rightly angered” by the fact that a “wealthy elite of large businesses” was using an army of accountants to get out of paying their fair share of tax.

“They basically see paying tax as an optional extra; they pick and choose the taxes you pay.

“There should be a general rule that you can’t play the system, you can’t abuse the system.

“We have received a report from an expert, Graham Aaronson, who has provided a report to the Treasury, that says what he calls an anti-abuse rule is feasible.

“I very much hope – and I’m not going to write George Osborne’s Budget – we can make progress on that in the Budget. We have got to make sure the tax system is fair.”

Speaking in Maidenhead, Berkshire, to an audience of small and medium-sized business leaders – many of whom are angry about forthcoming spot checks on their paperwork by HM Revenue and Customs (HMRC) – Mr Cameron agreed that bigger companies had to pay their “fair share”.

HMRC had to collect in “a fair and business-friendly way,” the Prime Minister said. “They have got to be thinking about being business-friendly to small businesses. With the large companies, that have the fancy corporate lawyers and the rest of it, I think we need a tougher approach.

“One of the things that we are going to be looking at this year is whether there should be a general anti-avoidance power that HMRC can use, particularly with very wealthy individuals and with the bigger companies, to make sure they pay their fair share.”

Mr Cameron said he had worked in “corporate Britain” and knew how companies “use the complexity of the tax and legal system to try and endlessly reduce their tax payments”.

“Of course it’s right for companies to be able to plan and have predictability and the rest of it, but they should be paying a fair tax rate,” he added.

Treasury Minister David Gauke said that anti-avoidance measures would be “a top priority” in the March 21 Budget, which would include measures to tackle wealthy individuals avoiding stamp duty on their homes and companies hiding their profits.

“People buying high-value properties must also pay their fair share. We’re looking at this area to see what more can be done,” the Exchequer Secretary said.

“It simply isn’t right that during tough times – when we’re trying to bring down the deficit – hard-working people pay their taxes in full while others avoid contributing their fair share through a range of elaborate schemes.”

Mr Gauke said the Treasury was looking carefully at the Aaronson proposals for a general anti-avoidance law.

“We’ll look at the proposals closely and discuss with business and people in the tax sector before responding at this year’s Budget,” he said.

Last month, a committee of MPs criticised “cosy” deals between HM Revenue & Customs (HMRC) and big businesses. The Public Accounts Committee singled out Dave Hartnett, permanent secretary for tax, for failing to handle tax negotiations with some big companies properly.

The committee said there was a lack of public accountability over how deals are done and large firms got favourable treatment.