Newly Elected Labour Government Vows to Tackle Tax Avoidance and Restore Social Fairness in the UK
London, 18 July 2024 – The newly elected Labour government has reaffirmed its commitment to tackling tax avoidance and restoring social fairness in the UK. The proposed policies are expected to not only address issues of fairness, but also generate billions in additional tax revenue each year.
The Need for Action
As of June 2024, the UK’s national debt has reached a staggering £2.7 trillion, with an average increase of £7.3 billion each month. This alarming trend has prompted the government to take decisive action in balancing the country’s books and creating funds for crucial investments in infrastructure and services for future generations.
During the election campaign, Labour consistently emphasized that an additional £5 billion a year could be generated by reducing tax avoidance. While this amount may not make a significant impact on the current deficit, it is a crucial step for any socialist party committed to curbing the exploitative practices of capitalism.
Key Policy Measures
To achieve its objectives, the government is proposing several measures, including:
Strengthening the General Anti-Abuse Rule (GAAR): The government plans to strengthen the GAAR, giving HMRC greater power to address tax loopholes and aggressive avoidance activities. This will involve expanding the scope of the current legislation and increasing penalties for non-compliance to deter such practices.
Increased Transparency: Multinational corporations will be required to provide more detailed information on their tax strategies, making it harder for them to shift profits to jurisdictions with lower tax rates.
International Cooperation: The government will actively participate in international efforts to limit tax avoidance, particularly through the Organisation for Economic Co-operation and Development’s (OECD) Base Erosion and Profit Shifting Project (BEPS).
Support for SMEs: To ensure that small and medium-sized businesses are not impacted by the tax avoidance practices of larger competitors, the government will introduce a tax simplification program. Additionally, HMRC will receive increased resources to assist SMEs with compliance.
Closing Specific Loopholes: Legislation will be introduced to target the use of non-dom status, offshore trusts, income shifting, and capital allowances in tax avoidance schemes. These measures will be robust enough to prevent circumvention through minor changes in tax strategy.
Restoring Trust and Fairness
Aside from the economic benefits, tackling tax avoidance is also crucial for restoring trust in society. For decades, there has been growing resentment in the UK as certain sections of society have been seen to receive preferential treatment while others struggle. The government believes that addressing this issue is a moral imperative.
While Labour’s stance on tax avoidance has been met with widespread support from both accountants and the general public, the policies are ambitious and will require significant effort to ensure successful implementation. If mishandled, there is a risk that these measures could make the UK less attractive for investment and hinder business growth.
For more information, please contact:
Nishi Patel
Managing Director, N-Accounting
nishi@n-accounting.co.uk
07735 501251
https://n-accounting.co.uk/
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Derick is an experienced reporter having held multiple senior roles for large publishers across Europe. Specialist subjects include small business and financial emerging markets.