An influential group of MPs is calling on HM Revenue & Customs to ‘name and shame’ those using aggressive tax avoidance schemes.
The Public Accounts Committee is clearly worried about the ability of HMRC to deal with these tax avoidance schemes, saying they are “running rings around” around the taxman.
Public Accounts Committee chairman Margaret Hodge said:
“There is a lack of transparency that makes it very hard to find out who is involved in marketing or using these schemes.
“HMRC publicises details of schemes that do not work but does not name the promoters or the clients. We have seen how public anger and consumer pressure can influence large companies, such as Starbucks, to behave more responsibly.
“HMRC should publicly name and shame those who sell or use tax avoidance schemes in order to discourage such activity. With at least £5bn lost to tax avoidance each year, HMRC has got to get much more robust in its approach.”
It is important to remember that tax avoidance is perfectly legal.
Tax evasion is of course illegal, with tax avoidance (particularly using aggressive tax avoidance schemes) becoming more morally questionable in the current age of austerity.
Aggressive tax avoidance schemes differ from common-or-garden tax avoidance, such as using your annual ISA allowance or making a contribution to a pension scheme in order to receive income tax relief.
Rather than naming and shaming the users or promoters of aggressive tax avoidance schemes, here is what we would like to see instead – clear rules from HMRC and a much simpler tax system.
Tax avoidance on this scale, often implemented by multinational corporations, is only possible due to the complexity of the UK and global tax system. Without so many loopholes, accountants would struggle to exploit the current tomes of rules.
Accepting that the only way to prevent aggressive tax avoidance is to shame individuals and corporations is a tacit admission that the tax system is broken.
Photo credit: Flickr/royalconstantinesociety
