It seems that the UK’s crackdown on Offshore tax avoidance has only managed to recover a third of the £1 billion figure predicted by the government, and according to HMRC, a series of measures used to tackle the evasion will only be able to bring in £349 million a year, almost £650 million less than target.
After the Paradise Papers, MP’s had made it clear that they would be putting an end to tax loopholes. However, these assurances have been undermined after many failed attempts. According to shadow chancellor, John Mcdonnell, these new figures show “the utter” failure of the government, ensuring that all tax owed is being paid. Though the government have been quick to show promises of action, he thinks that delivery has been much too slow. “Now they have been shown to not even deliver on what they originally promise.”
New measurements have been taken in order to avoid any further tax avoidance. The UK have now made deals with Switzerland, Liechtenstein and other locations where tax is low, to recover the taxes owed to HMRC. There have been a total of 28 anti-avoidance measures introduced under the coalition and conservative government, all of which have been bringing in less than predicted.
According to Labour, the gap between the original tax intake forecast and the revised estimates was 25%, at £2.1 billion. Attempts such as tackle base-erosion and profit shifting, a method which involves moving profits over to locations with lower tax rates, were other measurements made.
Diverted profits and royalties also faced new taxes which were expected to bring in a total of £515 million a year, but that figure has since changed, and is now expected to be £175 million less. Labour is now requesting that the government to take on policies from last years Labour manifesto. Policies such as open registers of company owners in overseas areas and inquiries to tax avoidance being made public are just two examples.
It’s not all bad
However, a few measurements taken actually received a more positive effect than originally predicted. The way company takeovers are structured have been cracked down on, increasing the estimated revenue raised through this by up to 554% from its original predictions.
Companies are no longer able to avoid stamp duty by cancelling and reissuing shares during a takeover, a new measure that is forecast to raise £425 million a year, a dramatic increase in comparison to the original £65 million forecast.
Theresa May responded to the Paradise Papers back in November 2017, making a point that HMRC had brought in an extra £160 billion in tax revenue since 2010.
According to a spokesperson for the treasury, “The UK has one of the lowest tax gaps in the world and we continue to take action to ensure everyone pays the tax they owe. Since 2010, we have secured and protected over £175bn for our public services that would have otherwise gone unpaid.”
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