Budget 2015: Osborne announces crackdown on tax evasion and avoidance

Government measures to penalise tax evasion and avoidance – including a fresh tax targeted at the likes of Google and Amazon- have been unveiled as part of plans that could bring in an extra £3.1 billion to the Treasury over the next 5 years.

According to the Telegraph, penalties for those who come forward to admit tax evasion will be toughened up from next year, of which details will be announced on Thursday by chief secretary to the Treasury Danny Alexander.

It comes after last month’s revelation that HSBC colluded with clients of its private bank to evade tax over many years.

The chancellor said: “In 2010, City bankers boasted of paying lower tax rates than their cleaners; the rich routinely avoided stamp duty; and foreigners paid no capital gains tax. We’ve changed all that … Let the message go out: this country’s tolerance for those who will not pay their fair share of tax has come to an end.”

The Chancellor’s crusade against tax abuse included:

  1. new criminal offences for tax evasion and new penalties for those professionals who assist them – details to be released on 19 March
  2. pushing through the diverted profits tax in this year’s Finance Bill to stop multinationals shifting profits between countries to lower their tax bills
  3. a review into deeds of variation (legal documents which allow a person’s will to be changed after their death to redistribute their assets) to reduce the avoidance of inheritance tax; and
  4. a standard for reporting financial data to HMRC from abroad. Currently used by 90 countries, the common reporting standard will help the department streamline investigation of offshore corporate tax evasion [1]

The chancellor’s critics have argued that such claims sit uneasily with his determination to keep Britain at the vanguard of tax competition. In two weeks’ time, the UK corporation tax rate will drop to 20%, the joint-lowest in the G20 — ranking alongside Turkey, Saudi Arabia and Russia. While Osborne and his supporters celebrate this achievement, some campaigners remain concerned that the UK is fuelling a destructive race to the bottom on tax rates [2].

[1] Nick Huber, Accounting Web

[2] Simon Bowers, The Guardian