Tories and Lib Dems wary of attack on tax avoidance

Ethics and tax ‘sit uncomfortably together,’ the Conservatives and Liberal
Democrats have said, in the clearest indication yet that they would be unlikely
to pursue an anti-avoidance agenda in the same way as Gordon Brown.

At the Chartered Institute of Taxation’s tax debate, held last week, Vincent
Cable, the Liberal Democrat shadow treasury spokesman, said that ‘the language
of morality [does not] actually help us [with tax]’.

Cable’s remarks, alongside those of Phillip Hammond, the Conservative shadow
chief secretary to the Treasury, suggested neither party wanted to pick a fight
over avoidance.

The chancellor’s battle over avoidance schemes, coupled with disclosure
rules, have seen the Treasury and the tax-collecting authorities stress the
moral aspect of tax avoidance repeatedly, as well as legal assaults on tax
structures and the closure of loopholes. Brown, who has used the clampdown as a
revenue-raising measure, has also been a long-term critic of tax avoidance since
his time in opposition.

Hammond suggested to the audience of tax professionals that the Tories would
not adopt the same attitude: ‘Ethics and tax sit uncomfortably together. I would
defend the right of people to minimise their tax.’

He did criticise ‘artificial structures’, which went beyond the normal bounds
of tax minimisation, but said: ‘The ethics are less important than the

Hammond also raised questions as to whether the attack on avoidance placed UK
companies at a disadvantage to their foreign competitors.

Cable agreed and said avoidance was a ‘practical problem’. Asked whether
either would pursue tax avoiders in the same way as Brown, Cable said that he
‘[found] it difficult to believe that there was anything Gordon Brown hasn’t
already thought of’. Abuses related more to corporate tax than personal tax, he

Hammond added: ‘We have said and recognise that it’s a perfectly legitimate
activity to close loopholes that have arisen. The reality is that people like
wealthy non-domiciled people simply will not pay higher taxes. They will go
away.’ This week’s Big Question, in association with Reed Finance, found that
57% of respondents believe that tax policy was an ethical issue.

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