Cable brands tax avoidance 'corrosive'

Tax avoidance is 'deeply corrosive of the ethical basis of taxation,' the Lib Dem shadow chancellor has said as he unveiled a package of anti-avoidance measures at the party's conference.

Plans to tax 'golden goodbyes' are among the package of anti-avoidance measures claimed to be worth £5billion annually

Vince Cable spelled out his proposals at a packed fringe gathering sponsored by the ICAEW in Bournemouth.

Cable said he would welcome accountants' advice on his proposals but made it clear that he is opposed to wealthier taxpayers using professional advice to avoid paying taxes intended to be due, labelling avoidance 'deeply corrosive of the ethical basis of taxation' and making clear some 'retrospection' is inevitable.

He said the 'golden goodbye' crackdown would use general anti-avoidance provisions to prevent 'disgraced former heads of business' subject to 'de facto firing' from claiming the redundancy exemption and structuring their payouts to benefit from other loopholes.

His package also includes:

• banning the use of special vehicles and offshoring to avoid paying stamp duty on property transactions;
• ending venture capital trusts and enterprise incentive schemes which Cable claimed do not actually encourage innovative and entrepreneurial activity;
• aligning capital gains tax with income tax;
• imposing an investment income surcharge to treat unearned income on the same basis as earned income; and
• ending the £30,000 'poll tax' on non-doms, restoring non-dom status for foreigners working in the UK for up to seven years and taxing them as British residents on all their income thereafter.

ICAEW technical committee head Francesca Lagerberg, from Grant Thornton, warned representatives 'fairness' was an inadequate criteria for tax policy because it meant different things to different audiences and urged 'reasonableness', 'proportionality' and 'certainty' should be considered as well.

The ICAEW has organised a series of meetings at all three party conferences, some in private with senior members of the government and the Conservative leadership as well as delegates.

Some of the Big Four are also intervening at the Labour and Tory conferences in a bid to influence the political agenda on issues well beyond accountancy.

Lagerberg later warned the government has not consulted widely enough on proposals expected in the autumn statement designed to stop 'income shifting' between husbands and wives in small businesses and urged a 'reality check' to ensure proposals 'do what it says on the tin' and do not have unintended consequences.