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Labour pledges ‘tough’ penalties for tax avoidance

Labour says it will impose penalties on those who are found to aggressively avoid tax if it wins at the general election next year.

The BBC reports that shadow chancellor Ed Balls wants to bring in a “genuine deterrent” for abuse of the tax system.

Currently if someone’s tax arrangements are found to be “abusive” they have to pay the tax they would have avoided.

But Balls wants people to be liable to pay the same amount again.

He says: “Those who are caught have to repay the tax they tried to avoid, but they do not face a penalty. There is still no disincentive to try and game the system.

“That is why Labour will bring in a tough penalty regime… with fines of up to 100 per cent of the value of the tax which was avoided.

“For the first time this will provide a tough and genuine deterrent to those who try to abuse the system and avoid paying their fair share of tax.”

A Conservative spokesman says the proposal is “feeble stuff”.

Labour has planned a series of tax rises, including a 1 per cent “mansion tax” on homes worth over £2m, to pay for a £2.5bn investment in the NHS over the next parliament.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Ed is talking Balls….again.

    Tax avoidance is the use of the law legitimately to reduce your tax liability. We all do it thro ISAs, pension contributions, making Wills.

    To be able to impose penalties he has to change the law.

    And every time politicians change the law they create new opportunities legitimately to reduce your tax liabilities.

    Does Ed have a Will, or a pension, or an ISA?

  2. Quite so, AS and, anyway, the present government has already stepped up its tactics to discourage aggressive tax avoidance strategies. That said, it would probably help if HMRC were to institute a policy of pre-vetting proposed tax avoidance strategies that haven’t yet been tried and tested rather than disallowing them after the event.

  3. Julian – spot on. It’s no use whatsoever HMG saying “we want to encourage investment in XYZ so we’ll give tax allowances” on the one hand – then saying five yars later “oh no, we don’t like that scheme so we’ll charge you double-tax”.

    They need to fix the goalposts at outset.

    (All pigs fuelled, and ready for launch…….)

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