READ Labour's FULL 17-point plan to crack down on tax avoidance
Labour has outlined its 17-point plan to crack down on tax avoidance. Read it in full below.
1. An immediate public inquiry into avoidance. The Labour Party wants to see an immediate public inquiry launched into the revelations in the Panama Papers, to establish the harm done to the UK’s tax revenue and consider detailed proposals for reform including, if necessary, amendments to UK company law and/or trust law to increase transparency.
2. Greater scrutiny of MPs. Labour will change the register of House of Commons Members’ Interests to include mandatory publication of all offshore holdings.
3. Create a specialised Tax Enforcement Unit. Labour wants HMRC to be properly resourced to investigate any potential illegality whether in relation to tax law or conflicts of interest for legislators. We would double the number of staff scrutinising the tax affairs of High Net Worth individuals and companies and increase the number of prosecutions.
4. A Withholding Tax for abusive tax havens. Labour will draw up a list of abusive tax havens and introduce sanctions against them. We will consult on the introduction of a withholding tax levied against any dividend, interest and related payments to individuals or companies in abusive tax havens. This will be deducted at source before any payment is made and remitted to HMRC.
5. Public filing of large company tax returns. Labour will require all large companies to publicly file their tax returns and related documents at Companies House. This will not only inform the public of novel tax avoidance tactics used by companies but also empower parliamentary committees to ask searching questions of the companies and HMRC. Currently, it is all too easy for companies to avoid this as they hide behind the veil of confidentiality.
6. Public filing of the tax returns of wealthy individuals earning more than £1 million. The Panama Papers, the HSBC leaks and others have shown that many wealthy individuals have used offshore tax havens to avoid taxes. Labour will erode the secrecy by the tax returns of wealthy individuals publicly available.
7. No public contracts for tax avoiders. Labour will legislate to ensure that those involved in tax avoidance are unable to secure public contracts from central government, local government and public bodies. Taxpayers should not fund contractors engaged in tax avoidance. All bidders will be required to make a public declaration of their profits from UK sources and corporation tax paid in each of the last five years. No contractor will be permitted to relocate public contracts in a tax haven entity.
8. Repatriate contracts parked in tax havens. Many public contracts for building schools, hospitals, care homes and other public facilities awarded to contractors under the Private Finance Initiative (PFI) have subsequently been relocated to tax havens. This has enabled contractors to avoid UK taxes on profits funded by taxpayers. Labour would require repatriation of all such contracts.
9. Public contract transparency. Overseas companies wanting to tender for public sector contracts must have all of their beneficial owners and directors listed publicly. Labour will establish a resister of companies bidding for public sector contracts and procurement which will show their shareholders, directors, control and full disclosure of beneficial ownership listed publicly. The companies must establish a permanent establishment in the UK and pay taxes on the profits made in the UK.
10. A register of beneficial ownership of companies. Labour will require disclosure of all shareholders above a minimal value, instead of only those holding over 25 per cent. It will not permit the real owners and beneficiaries to hide behind nominee shareholders and directors. No overseas company will be permitted to be a director of any UK company without meeting the UK transparency standards.
11. A register of trusts. Trusts are a key vehicle for tax avoidance and illicit financial flows. Labour will create a public register of all trusts showing their assets and beneficiaries. We will look particularly at trusts which transfer the residence of their trustees offshore, and those tax avoidance schemes involving trusts which are disclosed to the HMRC under the current law.
12. Enforce our programme by working with the banking sector. A Labour government will work with banks to promote good corporate governance and provide further information over beneficial ownership for all companies and trusts that they work for.
13. A General Anti-Avoidance Rule. The Government currently has what it calls a General Anti-Abuse Rule. This is inadequate as it does not challenge the abuses already established. It requires HMRC to seek permission from an business advisory panel before taking any legal action to stamp out abuses. Unsurprisingly, so far no action has been taken to deal with abuses. Labour will instead introduce a General Anti-Avoidance Rule (GAAR) designed to end sham transactions. Any transaction lacking economic substance will be considered to be a sham and thus not allowed for tax purposes. Oversight and guidance will be provided by a broader panel of experts.
14. Strict minimum standards for Crown Dependencies and Overseas Territories. This minimum standard will include a public register of owners, directors, major shareholders and beneficial owners for all companies and trusts and requirement for companies and limited liability partnerships to publish accounts.
15. Create an offshore trusts levy. This will capture purchases of UK property from offshore trusts located in tax havens.
16. Clamp down on the use of Advanced Thin Capitalisation Arrangements (ATCA). Advanced Thin Capitalisation Agreements (ATCA) are intended to give some certainty about their future tax liabilities to large, multi-group corporations, but evidence of their abuse has been documented. We will institute a review of their use.
17. Close the “Mayfair Tax” Loophole: this allows individuals to treat carried interest as capital gains, rather than income, significantly reducing their tax liability.
Read our FULL story on Labour's plan for tax avoidance and a new 'Robin Hood Tax' on financial transactions here.