After rows over Jimmy Carr’s yearly £3.3million tax avoidance, the HMRC has promised to come down hard on tax avoiders. The Government is giving them new authority to establish a list of all offenders, in the hope that shaming these individuals will dissuade them from continuing their legal, but morally questionable, practices.
Stand-up comedian, Jimmy Carr, who criticized Barclays’ tax avoidance in one of his performances, was paying as little as 1% tax on his earnings through K2’s legal scheme. It is thought that this Jersey-based company had 1,000 members, with over £168 million offshore in total.
He was denounced by David Cameron as “morally wrong.” Danny Alexander, chief secretary to the Treasury, put tax avoidance on par with benefit fraud. But singer, Lily Allen, lashed out at this comparison via Twitter, by declaring that tax avoiders were ‘a hundred times worse’ than benefit cheats.
Even after a move by politicians to condemn Jimmy Carr, there are no plans to overhaul the taxing system that allows tax avoiders to flourish. The aim is to publically embarrass those who exploit loopholes. Jimmy Carr said:
“I’ve not broken the law. I’ve not done anything illegal. But morally, morally…” He also apologised for his actions and agreed that this was a “serious matter” that he “deeply regretted.”
Officials are claiming this is a moral scandal, not a legal problem. Ed Miliband has rose up against the public fruit-throwing and said:
“I’m not in favour of tax avoidance obviously, but I don’t think it is for politicians to lecture people about morality.” Conservative trustee, George Robinson, was forced to pay back millions of pounds after it was ruled in court that he had unfairly exploited a tax scheme.
The Government is aiming to bestow greater powers on HM Revenue & Customs, so they can demand to look at financial firms’ books and their list of clients.
If companies refuse to comply, there can be fines of up to £1million. Names aren’t to be published frequently, although will be used as evidence in the event of a tax tribunal.
Tax avoiders are said to harm the country by cheating away money that could otherwise go towards public services and welfare. They are also criticized for crippling the economy by warping business competition, and undermining the many taxpayers who pay their dues, whilst tax-avoiding millionaires are having a “free ride.”
It is claimed that the Government is failing to tackle this issue by scapegoating those who are purely working within their laws, when it comes to tax payments.
With billions of pounds reputedly lost to tax avoidance every year, moves by the Conservative party to cut taxes for millionaires have been ridiculed as unfair, and leaving many ordinary families fronting the brunt of this age of austerity.
It is estimated by the Treasury that at least 14% of unpaid tax income is due to tax avoidance schemes. In new rules, tax avoidance firms will have to disclose all the schemes they utilize.
This news article has been written and contributed by finance blogger Zoe, on behalf of Brookson.