UK to drive G8 tax crackdown

By Louise Armitstead, Chief Business Correspondent

The Chancellor said he was committed to “leading the international effort” to prevent international companies transferring profits away from major economies, including Britain, to tax havens.

He pledged “more resources” for the Organisation for Economic Co-operation and Development (OECD) to create a levy that will catch earnings of multi-national firms.

“We will put more resources into ensuring multi-national companies pay their proper share of taxes,” said the Chancellor. “With Germany and now France, we have asked the OECD to take this work forward and we will make it an important priority of our G8 Presidency next year.”

The pledge came as Starbucks neared a settlement with HM Revenue & Customs (HMRC) to pay millions of pounds of tax on its UK earnings. The deal, expected imminently, is thought to be a high proportion of the “royalty” Starbucks currently pays to its European headquarters in Amsterdam. It could be as much as £10m - more than the £8.6m of corporation tax the coffee chain has contributed in 14 years of operating in Britain.

Starbucks bowed to public and political pressure and opened talks with HMRC on its tax contributions earlier this week.
 

The US company, along with Amazon and Google, were accused of “immorally minimising their tax obligations” by the Public Accounts Committee in a report published on Monday.

In their report the MPs also criticised the HMRC’s dealing with big firms but the Chancellor said yesterday that “prosecutions for tax evasion are up 80pc”. He added that HMRC’s budget would be ring-fenced for two years and boosted by extra £77m for fighting tax avoidance. On top of the introduction next year of the General Anti-Abuse Rule (GAAR), he promised an extra 2,500 tax inspectors specifically to combat avoidance and evasion.

“Hundreds of millions of pounds of tax loopholes are being closed with immediate effect, and we are investigating abusive use of partnerships,” he said.

The Chancellor also highlighted the UK’s agreement with Swiss authorities which he claimed would result in the “largest tax evasion settlement in British history”.

He said: “Next year, for the first time in our history, money will be flowing from bank accounts in Switzerland to Britain instead of the other way round. Because of the Treaty we’ve signed, we expect to receive £5bn over the next six years from the undisclosed Swiss bank accounts of UK residents.”

Referring to the surprise cut in corporation tax, Mr Osborne said: “We want the most competitive corporate tax system of any major economy in the world, but we expect those corporate taxes to be paid.”

In the next few weeks, the Chancellor is expected to give an up-date on a radical new “information sharing” agreement with Britain’s Crown Dependencies that would deliver tax details on accounts held off-shore in Jersey, Guernsey and the Isle of Man.

Jason Collins, Head of Tax at Pinsent Masons, the international law firm, says: “HMRC is launching a blistering new attack on offshore tax avoidance and evasion. Each day it gathers more information about how people use offshore structures and vehicles, and when it catches up with people it will put them through the mill, including using the nuclear deterrent of applying the General Anti-Abuse Rule. Anyone with an offshore structure needs to look very carefully at why they have one and whether it is worth the grief.”

Meanwhile, the PAC is continuing its investigation of corporate tax schemes. On Thursday, the Parliamentary Committee is due to grill the bosses of Ingenius Media and Future Capital Partners on the subject of marketed avoidance schemes. /Telegraph