Treasury threatens to expose rich who avoid tax
‘Enjoying a free ride’
TAX-dodging celebrities and the super-rich face exposure if they try to avoid paying their share under a crackdown being unveiled today.
The Treasury will publish plans to ensure the taxman knows exactly which celebrities, sports stars and millionaires benefit from tax-avoidance schemes, following the furore over comedian Jimmy Carr’s tax affairs.
Treasury officials insisted the Chancellor will not name and shame the rich and famous and that personal tax confidentiality will be preserved.
But a senior Government source said the plans would make it ‘more likely’ that court cases could be brought against those who use taxavoidance schemes, and that could lead to names becoming public in some cases in future. The threat will act as a warning to public figures tempted to repeat the actions of Mr Carr, who was publicly vilified when it emerged he had funnelled his earnings into a Jersey-based tax-avoidance scheme called K2, which reduced the income tax liability of participants to as little as 1 per cent.
Mr Carr apologised to his fans and withdrew from the scheme after HM Revenue and Customs announced it was investigating K2.
Other celebrities caught in the crossfire include Take That star Gary Barlow, who was battered by adverse publicity after questions were raised about a scheme he put money in to.
David Cameron and Chancellor George Osborne have both branded aggressive tax avoidance ‘morally repugnant’.
Revenue and Customs officials have previously agreed deals with tax cheats in secret, allowing those caught out to pay tax back but remain anonymous. However, referring to the probable outcome of the new plans, the source said: ‘If you did go to court it is more likely that names would emerge.’
In a speech today at the Policy Exchange think tank, Treasury Minister David Gauke will lay out plans for the tougher regime, in which promoters of tax-avoidance schemes will be forced to provide HMRC with more information about their customers so that it can more easily identify the users.
Mr Gauke will say: ‘We are building on the work we have already done to make life difficult for those who artificially and aggres- sively reduce their tax bill. These schemes damage our ability to fund public services and provide support to those who need it.
‘They harm businesses by distorting competition, damage public confidence and they undermine the actions of the vast majority of taxpayers, who pay more in tax as a consequence of others enjoying a free ride.’
Crucially, the Treasury also plans to target those who run the schemes. Individuals managing or promoting tax-avoidance schemes are also subject to the rules, as well as their firms.
This will allow investigators to hold them to account even where a firm is dissolved, moved offshore, or an individual promoter moves to a different firm. HMRC will publish more details for taxpayers on the risks involved with tax shelters and will tell them directly when their attempts to dodge tax have proved ineffective. Tax investigators will also use rules on financial services mis-selling to go after accountants who offer misleading tax services.
The Treasury will today begin a three-month consultation on how the changes should be implemented.