Ed Miliband promises tax avoidance crackdown

Ed Miliband promises tax avoidance crackdownLabour leader Ed Miliband has promised a fresh crackdown on tax avoidance as part of his plans to increase funding for the NHS if he becomes prime minister next May.

Mr Miliband’s speech to the Labour conference in Manchester pledged to increase funding for the health service by £2.5 billion, adding that this would not be funded by either extra borrowing, or taxes on “ordinary people”.

Some of the money would come from a “mansion tax” on homes worth more than £2 million, but he also targeted tax avoiders.

“We will clamp down on tax avoidance including tax loopholes by the hedge funds to raise over £1 billion,” Mr Miliband pledged.

Mr Miliband’s pledge echoed that of shadow chancellor Ed Balls, who told the conference in his speech that Labour will “scrap the shares for rights scheme, reverse the tax cut for hedge funds, crack down hard on tax avoidance and close tax loopholes”.

The current government has already tightened up on tax avoidance, with a number of court cases being pursued by HM Revenue and Customs (HMRC) This included high-profile cases including the likes of musician Gary Barlow, along with two of his Take That bandmates and the group’s manager.

It remains to be seen what the rdetail is of the Labour proposals, but while governments may seek to close tax loopholes, many businesses and high net worth individuals will seek to use skilled tax accountants to help keep their bills down.

A study carried out for the Public and Commercial Services Union has suggested that tax avoidance currently costs the Treasury over £80 billion a year, a figure predicted to rise to £100 billion by 2018-19.  

Published by tax expert Richard Murphy of Tax Research UK, ‘The tax gap: tax evasion in 2014 and what can be done about it’ has been presented to the Labour conference. It calls for a rise in staffing levels at HMRC, a stronger anti-avoidance law and country-by-country reporting for multinational firms.

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