Labour has reaffirmed its commitment to cracking down on tax avoidance, pledging to reintroduce clauses dropped from the current finance bill after the general election.
Outgoing chief treasury secretary Paul Boateng said a further finance bill will be pushed through, reinstating the crackdown designed to add £3bn to revenue. He said all changes would be backdated to when they were originally intended to apply.
His declaration was delivered in the Commons, where he was forced by the Tories and Liberal Democrats to ditch clauses designed to prevent capital gains tax avoidance through using options to sell or buy assets at un-commercial prices. He was also prevented from closing a loophole in the controlled foreign companies rules designed to prevent UK multinationals diverting profits to low-tax regimes.
The 66 clauses stripped from the finance (No.2) bill – forced through all its stages in just four hours on Wednesday ? also included the ending of arrangements to reduce National Insurance Contributions on earnings by using employment-related securities, the removal of annuities and other annual payments from the types of payment treated as charges on income, the closing down of marketed avoidance schemes involving financial products which new rules force practitioners to disclose, and measures to counter the exploitation by companies of differences within and between tax codes to get a UK tax advantage.
Boateng said they were, ‘essential for an effective, principled, targeted and fair tax system’, adding: ‘it is therefore our full intention to introduce a second finance bill after the election – should it be the wish of the British people – in which the measures not included in this revised version will be brought back.
‘We will, of course, aim to ensure that the statutory dates for these measures will continue to apply, as announced in the Budget.’
Shadow Tory chief secretary George Osborne said: ‘We could not allow to pass into law without any examination the dozens of clauses and hundreds of pages of complex tax legislation which the government said were necessary to counter tax avoidance, and which appeared in the initial Finance Bill published just a couple of weeks ago.’
He said he agreed in principle with measures to close loopholes but they required ‘the closest possible examination’ and concurred with representations from the Institute of Chartered Accountants that to rush them through without scrutiny would undermine trust in the Parliamentary process.
He said had been persuaded by special pleading from industry, particularly the film industry and charities, to allow some other measures to proceed.
Shadow Lib Dem Chancellor Vincent Cable said the anti-avoidance measures were needed to secure £3bn in revenue but required ‘a great deal more time for reflection’.
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