Chancellor George Osborne has outlined plans to impose a £2bn a year clampdown on the tax affairs of multi-national firms operating in the UK in an attempt to gain control over the deficit and react to controversy surrounding firms such as Starbucks.
In his Autumn Statement on Wednesday, Osborne will look to address “unacceptable” and “immoral” tax avoidance.
Osborne has handed HMRC an extra £77m a year to tackle companies who avoid tax and “cowboy advisers” who sell schemes designed to facilitate tax avoidance.
This is expected to bring in an additional £2bn per year in tax that would have otherwise gone unpaid.
Osborne says: “The Government is clear that while most taxpayers are doing their bit to help us balance the books, it is unacceptable for a minority to avoid paying their fair share, sometimes by breaking the law.
“We are determined to tackle this problem and HMRC are making good progress, but we are giving them additional tools to bring in more.
“The action we are announcing today will help HMRC close in not only on those who seek to avoid or evade tax, but on the dubious ‘cowboy’ advisers who sell them the schemes and dodges they use to cheat the law-abiding majority.”
The chancellor will announce further action to close specific tax avoidance loopholes on Wednesday.
This follows the publication of a report by MPs on the public accounts committee describing evidence from Starbucks, Amazon and Google, as well as HMRC, as “unconvincing and in some cases evasive”.
The committee added the three companies were “using the letter of tax laws both nationally and internationally to immorally minimise their tax obligations”.
The MPs’ report calls for predictable and fair taxation citing a “complete lack of transparency about why multinationals pay so little corporation tax”.
Committee chair Margaret Hodge says: “There is little credible information about what is going on. The evidence we took from large corporations was unconvincing and, in some cases, evasive. HMRC also lacked clarity when trying to explain its approach to enforcing the corporation tax regime.
“The inescapable conclusion is that multinationals are using structures and exploiting current tax legislation to move offshore profits that are clearly generated from economic activity in the UK.”