Labour to bring in tougher tax avoidance penalties

By Ben Rochelle November 14, 2014 11:18 am

Labour has promised tougher penalties for tax avoiders if they get into power at the next election.

Shadow Chancellor Ed Balls said that Labour will impose fines of up to 100% of the value of the avoided tax.

The Shadow Chancellor said that tackling tax avoidance is crucial in keeping public support, enabling a more open market economy, reducing the deficit and raising revenues to protect the NHS.

“Business and politicians alike cannot afford to bury our heads in the sand and ignore the legitimate and mainstream concerns of people across our country that our economy is not currently working for them,” he said.

“That’s why Ed Miliband and I want big changes to create an economy that works for working people and a recovery for the many, not just a few.”

He added: “Tackling tax avoidance is a key part of our economic plan. A fair and robust tax system is vital if we are to bring down the deficit, safeguard our National Health Service and maintain public support for the dynamic open economy we need.

“At the moment, we are going in the wrong direction. The amount of uncollected tax – the so-called ‘tax gap’ – rose again to £34 billion in the latest year on HMRC’s own estimates. It’s up by £3 billion under this government and tax campaigners have suggested the true figure could be much higher.”

The move to introduce penalties to add to the general anti-abuse rule (GARR) is likely to bring opposition from some taxpayers, who say that it would add uncertainty around legitimate tax planning. As it stands those who are caught by the GARR have to repay the tax they tried to avoid, but do not have to pay a penalty.

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