Joseph Watts, Political editor
Tuesday, February 19, 2013
A Norfolk MP has said the government must transform UK taxes to prevent avoidance schemes like that which saw comedian Jimmy Carr paying as little as 1pc of his income into Treasury coffers.
South Norfolk MP Richard Bacon, who sits on Parliament’s Public Accounts Committee, made his call as the group published a report yesterday into tax avoidance.
Aggressive avoidance scheme promoters were “running rings” around HM Revenue and Customs, the committee’s report said.
Meanwhile, it warned that the taxman was losing the “game of cat and mouse” as tax consultants took advantage of the time it took officials to shut down a particular avoidance method to make money.
Mr Bacon argued the only way to fundamentally address the problem was to massively simplify the tax system.
He said: “The problem is that previously it’s been thought that by adding several hundred extra pages to tax regulation each year you could solve the issue.
“But all you are actually doing is giving more work to lawyers and tax consultants to find more loopholes.
“We need to make the entire system much simpler. That’s the only way to get ahead of the big companies in this game, and it’s going to take political will.”
Last year comedian Jimmy Carr admitted to making a “terrible error of judgment” after it emerged he used a complex scheme to reduce his tax bill.
Meanwhile the committee’s chair Margaret Hodge said: “We have seen how public anger and consumer pressure can influence large companies, such as Starbucks, to behave more responsibly.
“HMRC should publicly name and shame those who sell or use tax avoidance schemes in order to discourage such activity.
“With at least £5 billion lost to tax avoidance each year, HMRC has got to get much more robust in its approach.”