Tax avoidance: The battle lines have been drawn

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This article originally appeared on the TDDB blog, 03/04/2014. The Tax Dodgers Database website is now also live, you can check that out here

Yesterday, the Tax Dodgers Database website went live. The site is the culmination of two month’s worth of report dissection, specialist interviewing, corporate stonewalling and, of course, trance-like writing. Beginning the project as a self-confessed ‘tax prat’, it hasn’t been the easiest of journeys, and it’s certainly been a steep learning curve. The key thing we can take away from it all? The battle for the tax system is only just beginning.

Across the spectrum of organisations and people with a vested interest in the subject, you’ll be able to see armour being polished, weapons being serviced and alliances being made. Everyone in government believes something should be done, yet the politicians are split down the middle about what exactly that something should be. Economics and tax bloggers are sharpening their knives, waiting for the next big news release on the subject to pick apart and chastise, whilst activists and anti-avoidance campaigners are shouting louder than ever about the global inequality the existing system precipitates. The companies themselves appear anxious, as international pressure grows and public opinion turns against them they are beginning to realise that the decadent tax avoidance that many of their profit margins rely upon may soon be a thing of the past. Companies dependant upon high street revenues, especially, are becoming uneasy, floundering to protect their brands – as shown most clearly by Starbucks’ voluntary £20 million payment to HMRC at the book-end of 2012.

The Chancellor, George Osborne, appears to be taking a tough stance on the issue, and is set to oversee the inevitable introduction of a General Anti-Abuse Rule, aimed at putting an end to the game of cat and mouse that occurs every year between the tax necromancers working for multinational companies and HMRC. In addition to that, there’s the £4.6bn budget promise to clamp down on low-level tax avoidance, such as that made famous by the comic Jimmy Carr.

But GAAR is hardly the knight in shining armour that the treasury needs and there’s no guarantee its introduction will significantly push up tax revenues, whilst the £4.6 bn budget grandstanding will not get anywhere near to cutting into the thorny issue of offshore avoidance schemes. These are the schemes that really matter, the ones flaunted by the companies listed on our database, the ones that significantly dent the UK’s tax receipts.

On such schemes, George Osborne claims that “We are leading international action on tax avoidance, through our presidency of the G8, with the OECD (Organisation for Economic Co-operation & Development) and at the G20.”

Whether this supposed captaincy of tax action actually materialises, we’ll have to wait and see. But the chancellor is correct in recognising that tax avoidance is a global issue and one that Britain can’t really eradicate on her own.

We can set the tone of the global debate on tax avoidance though. Campaigning on this issue is really starting to gain some traction, with economics expert Richard Murphy leading the charge amongst the tax-savvy avoidance crusaders, whilst organisations like UK Uncut and The Rules are taking a complex issue and putting it into the public consciousness with admirable vigour. A General Anti-Tax Avoidance Principle (a different and more effective form of the GAAR), tabled by the saintly Michael Meacher, is currently being debated in parliament, but looks unlikely to go anywhere as it is just too much too soon in terms of avoidance legislation.

The weeds of rebellion are creeping through the concrete slate of tax avoidance that has held fast and unquestioned for decades. A complex and dynamic issue has finally found itself in the spotlight of public debate. And as the battle lines are drawn, pro-corporate liberty on one side and anti-tax avoidance on the other, many major multinational companies must be frantically estimating which side will win – for the sake of their profits and futures, that is the only side they will join.

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