Cameron calls for international action on avoidance

EFFORTS to curb tax avoidance will require international co-ordination if a clampdown on companies and individuals paying too little into the public purse is to be effective, the prime minister claims.

Speaking at the World Economic Forum at the Swiss resort of Davos, he said companies paying little or no tax, such as Starbucks, have to “wake up and smell the coffee”.

“I am a low-tax Conservative, but I’m not a companies-should-pay-no-tax Conservative,” he said. “Individuals and businesses must pay their fair share.”

He added he wanted to work with the UK’s G8 allies – the US, Germany, France, Russia, Italy, Canada and Japan – to determine whether existing rules were adequate to deal with tax avoidance. There are limits, he said, to what countries can achieve when acting alone on tax, The Times reports.

Cameron said: “Some forms of avoidance have become so aggressive that I think it is right to say these raise ethical issues – and it’s time to call for more responsibility and for governments to act accordingly.”

The provision of automatic information exchange between nations in order to catch out those illegally evading needs exploring too, he said.

The G8, which Britain will host this year, should work for greater tax transparency in poorer countries lacking the resources to collect revenues, he went on.

However, his comments have attracted criticism from some quarters, with ICAEW chief executive Michael Izza expressing dismay with Cameron’s depiction of accountants in his speech.

“I was disappointed to hear the prime minister again dismiss accountants, this time as an ‘army’ of avoiders, or ‘clever accountants’,” Izza said in his blog.

“We don’t recognise that description. Our members do not support illegal tax evasion or the kind of aggressive tax avoidance that we believe to be unethical. In fact, an effective accountancy and finance profession can and does help solve many of the problems the prime minister wants to address.”

Cameron’s lack of detail on what he considers to be abusive tax avoidance also drew criticism, with Milestone Tax founder Miles Dean branding it a “missed opportunity”.

Dean said: “We have had the usual rhetoric which is that aggressive avoidance is not acceptable. What forms of tax avoidance is he referring to?

“At the heart of this seems to be the colloquial notion that a multinational corporation is akin to your average corner shop. This is total folly. Many of the businesses under the spotlight are monolithic and the fact that they choose one jurisdiction over another for a particular function is down to tax competition – something that is rife within the EU.”