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‘Clear rules needed to identify tax evasion’

The complexity of the UK tax system creates opportunities for tax evasion and is damaging the country’s competitiveness, says PricewaterhouseCoopers.

At the Treasury select committee’s first evidence session as part of its offshore inquiry, PWC tax expert John Whiting also called for greater efforts from governments to improve the regulation and transparency of offshore centres.

He said greater information exchange between authorities and a clearer tax system would make it easier to distinguish between tax avoidance and evasion and bring more clarity to the offshore debate.

Whiting said: “A country or legislature attempting to tackle what it sees as unaccep-table tax avoidance must have a clear set of rules and good disclosure as often some avoidance tips into evasion simply because the perpetrator does not disclose it properly.”

In written evidence submitted to the TSC, Whiting highlighted the need for the Government to bring pressure on other authorities to encourage transparency through a better system of information-sharing, saying this is a vital measure to combat tax evasion.

He said: “The authorities need to persuade the Liechtensteins of this world to come clean and cooperate.”

In April 2007, HM Revenue & Customs announced a tax amnesty for savers who had undeclared offshore income, enabling them to pay a fixed-rate penalty, in a bid to boost internal revenue and close the net on those who are deliberately evading payments.

Whiting said this was a successful PR exercise for raising the profile of voluntary disclosure. He said: “It has done a great deal to get the message round that information exchange happens and if you try to conceal the money you have, the tax authorities can track you down.”

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