Thursday, 19 August 2010

Tax avoidance to get easier before it gets harder

In May, the Coalition Agreement said:

The parties agree that tackling tax avoidance is essential for the new government, and that all efforts will be made to do so, including detailed development of Liberal Democrat proposals.


Last week, Philip Green was appointed to advise the Coalition on efficency measures, despite his own controversial record on tax.

Business Secretary Vince Cable - a staunch critic of tax avoidance - was not consulted about the appointment and refused to endorse it. Cable told City AM: "There's a lot I could say on this, but I'd better miss this one out ...I'm tempted to comment, but I think I'd better not".

Green was not pleased, phoning the newspaper to call the reporter concerned a "fucking tosser" for inquiring about his tax status.


On Wednesday, as his own MPs turned up the heat over Green's appointment, deputy Prime Minister Nick Clegg said that plans to crackdown on tax avoidance remained at the front of his mind, and that the government was looking into what to do about it:

We are looking at the case for an anti-avoidance rule to ensure that wealthy individuals pay their fair share of tax.”


So it may (perhaps) get harder to avoid tax under the Coalition government some day.

Still, it now looks rather as though tax avoidance may get easier first, as Friday's Financial Times front-page reports a softer approach from Her Majesty's Customs and Revenue towards tax avoidance by major businesses.

The headline: Tax office to soften stance on avoidance

The FT reports that the HMRC permanent secretary for taxation believes the Revenue can be too "tough" in its willingness to pursue legal action under its 2007 litigation strategy, and that inspectors will in future be asked to reach agreements instead where conflicting advice means different amounts could plausibly be thought payable.

The FT report suggests the shift in emphasis is intended to "chime" with the Coalition's pro-business approach.

a greater willingness to settle cases would be welcomed by businesses critical of the Revenue's uncompromising approach to litigation and also chime with the Coalition's "open for business" message.

Curiouser and curiouser.

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