Tax Loopholes and Reliefs
There are 1180 tax loopholes in the UK and the government only knows the impact & cost of 365 of them.
Closing just 5 tax loopholes could raise £7 billion a year.
End fossil fuel subsidies for oil and gas companies to raise £4.4 billion a year
End classic car exemption to raise £130 million a year
End video games tax relief to raise £197 million
Close capital gains tax loopholes to raise £1.1 billion a year
Close inheritance tax loopholes to raise £1.7 billion a year
The National Audit Office estimates the cost of tax reliefs to be £204 billion every year.
Tax reliefs are used by the government to try to encourage certain activities or types of investments but it’s unclear whether tax reliefs are working as intended or not.
HMRC have assessed only a fraction of tax reliefs over the past nine years. One of the tax reliefs they did assess – research and development relief for smaller businesses – was being claimed fraudulently or in error a quarter of the time. Result Over £1 billion a year that was claimed wrongly.
Investing in HMRC
Tax gap: the difference between what HMRC expects to receive and its actual receipts increased to £36bn in 2022-23
The Government needs to:
Properly resource HMRC
Scale up the number of targeted audits that HMRC carries out
Focus investigations at the top-end of tax abuse by wealthy individuals and ensure HMRC’s 'Wealth Unit’ is properly resourced
Reform DOTAS (disclosure of tax avoidance schemes), enabling HMRC to require scheme promoters to give them the materials that they provide to customers
Tax Avoidance
The UK, together with its network of Overseas Territories and Crown Dependencies, is the world's greatest enabler of global tax abuse.
One primary way in which the Overseas Territories enable tax abuse is by allowing businesses to use shell companies to shield the true identity of their owner. Action should be taken to address this tax abuse.
The Overseas Territories should be required to introduce public registers of beneficial ownership.
A global asset register (GAR), linking together beneficial ownership registers across the world, and covering all legal vehicles and high-value assets, across jurisdictions, would provide a critical tool against tax abuse. Importantly, it would also show the true level and nature of economic inequality at the global level.
Country-by-country reporting requires large multinational enterprises to report an annual breakdown of the key elements of their activities, in the jurisdictions in which they operate.
This provides tax authorities with visibility of revenue, profits generated and tax paid, on a country-by-country basis.
This data is already disclosed privately to HMRC, and to select tax authorities across the world. However, there is no UK requirement for country-by-country reports to be made publicly available.
WE CAN DO IT
Campaigning by groups like Fairer Housing and partners Tax Justice UK, mean that Wealth taxes are now a part of the conversation.
The Government has already been forced to make u-turns on a global minimum tax deal, measures to tackle economic crime and a windfall tax on oil and gas companies.
The UN Tax convention is a global gamechanger.