Robin Walker, MP for Worcester, has welcomed measures in yesterday’s Budget that will press ahead with a new tax on multinationals that divert profits offshore and pledged to raise £3.1bn over the next five years by cracking down on “those who will not pay their fair share of taxes” as introduced by the Chancellor.
The Government has already taken significant steps to tackle aggressive tax avoidance and evasion – of both some large companies and individuals, going further than any previous government, closing more of the loopholes we inherited every year, and raising £85 billion in compliance activity. The Government is committed to recouping an additional £5 billion by clamping down in the next parliament at the same rate as in this parliament.
Key measures that have already been introduced include making sure multinationals pay their fair share. Some of the largest companies in the world use elaborate structures to avoid paying tax. To make sure they contribute the Government is introducing a 25 per cent tax on multinationals’ profits where they’re artificially shifted out of the country. This will raise over £1 billion over the next five years.
There has also been investment in HMRC to deal with aggressive avoidance and evasion. The Government has invested £1 billion in HMRC since 2010 to tackle tax avoidance, evasion and non-compliance. HMRC have recovered more than £31 billion in tax as a result of interventions with large businesses since 2010. HMRC’s High Net Worth Unit has collected £852 million from the UK’s wealthiest people. Between 2010 and 2011 and the end of March 2015, HMRC will have collected more than £100 billion in additional compliance revenues.
Robin has also highlighted the importance of helping less developed countries to develop stable tax regimes and ensure that British companies operating around the world pay their tax wherever they operate. He personally campaigned for the UK to sign up the Extractive Industries Transparency Initiative, which the last government created for developing countries but failed to sign the UK up to. The Prime Minister listened to this campaign and that the UK is now a signatory. Robin also supported the BIS select committee in holding an enquiry into the extractive industries and the UK’s role as the key centre for finance for the global mining industry and one of its key conclusions was that we must lead the world in transparency, including tax transparency, in order to justify this position. In addition he also publicly supported a public register of beneficial ownership, which this Government will be one of the first in the world to introduce.
Nearly a quarter of the new measures announced in yesterday’s Budget were aimed at increasing fairness, evasion and avoidance.
Companies that move their profits overseas to avoid tax will be subject to a “diverted profits tax” from April, the Chancellor has said. The Chancellor also said firms that aid tax evasion will also face new penalties and criminal prosecutions.
The so-called “Google Tax” is designed to discourage large companies diverting profits out of the UK to avoid tax. The Chancellor also said he would also change the corporation tax rules to prevent contrived loss arrangements. He added he would also be closing tax loopholes that enabled businesses to take account of foreign branches when reclaiming VAT on their overheads.
The Chancellor will also close a loophole in the law that allowed the banks to offset charges for mis-selling, including payment protection insurance, and other misconduct against their corporation tax bills.
Many multinational companies make millions in the UK, but have their headquarters in Ireland where the corporation tax rate is much lower, meaning they pay a lower rate of tax on those profits there.
Companies such as Starbucks, Google, Apple and Amazon, among others, have come in for significant criticism in recent years over the amount of corporation tax they pay in the UK.
Under the new tax regime, companies with an annual turnover of £10m will have to tell HM Revenue & Customs (HMRC) if they think their company structure could make them liable for diverted profit tax.
The Chancellor said in yesterday’s Budget Speech:
“We have created a fairer tax system. Further proof we are all in this together. The share of income tax paid by the top 1% of taxpayers is projected to rise from 25% in 2010 to over 27% this year – that is higher than any one of the thirteen years of the last government.”
“We’re getting more money from the people paying the top rate of tax.”
“Because we understand that if you back enterprise, you raise more revenue.”
“And the House will also want to know this – the lower paid 50% of taxpayers now pay a smaller proportion of income tax than at any time under the previous government.”
“At home it is also really important that we have raised the rate of capital gains tax so that it is no longer so easy for very rich individuals to avoid paying income tax by transferring their profits into capital gains. It was a real scandal that under the last Labour Government many of the richest people in Britain were paying less tax than their domestic staff by using this method of legal tax avoidance.”
“It has been absolutely right for the Government to close this loop hole and similarly to act on people avoiding stamp duty by transferring properties to private companies. These measures mean that the richest people in society are bearing a fairer share of the burden of taxation today than they were in 2010 or for many years before.”
“I want to see Britain set competitive tax rates to help attract investment and support businesses, entrepreneurs and job creation. However for taxes to be low we need to make sure they are all paid. I am proud that this Government has closed the tax gap and made our taxation system more progressive but there is undoubtedly further to go. Individuals and small businesses who work hard and pay their tax want the reassurance that Government will make sure that everybody else does too. It is good to see the Chancellor taking further action to make sure this is the case.”