'Cowboy' tax scheme firms 'to disclose client lists'

David Gauke David Gauke said the UK had an excellent record on clamping down on avoidance schemes

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The government is promising to force "cowboy" financial firms to disclose the names of people using "aggressive" tax avoidance schemes.

Treasury minister David Gauke said such products were "repugnant" and unfairly penalised ordinary taxpayers.

The proposal is part of a government consultation on curbing avoidance.

Later, Mr Gauke said householders who paid tradesmen in cash were morally wrong as they were "facilitating the hidden economy".

Tuesday's Daily Telegraph quotes Mr Gauke as saying: "Getting a discount with your plumber by paying cash in hand is something that is a big cost to the Revenue and means others have to pay more in tax.

"I think it is morally wrong. It is illegal for the plumber but it is pretty implicit in those circumstances that there is a reason why there is a discount for cash. That is a large part of the hidden economy."

Mr Gauke told Mondays BBC's Newsnight programme: "When a tradesman says 'here's a 10%, a 20% discount on your bill if you pay me cash in hand' that is... as a big a problem in terms of loss to the Exchequer as tax avoidance.

"Revenue is not being paid as it should be paid... If people do that, they have to do so with the recognition that it means taxes will be higher for the rest."

Last month Prime Minister David Cameron condemned the use by comedian Jimmy Carr of a Jersey-based scheme as "morally wrong".

That was one of a number of high-profile cases of people using financial loopholes to legally avoid large tax bills.

The Treasury estimates that 14% of all unpaid tax income is due to aggressive avoidance schemes, which are not illegal but are deemed unfairly to deprive the government of income.

The proposals include:

  • Measures to make finance companies disclose details of wealthy clients who take advantage of such schemes
  • Firms having to disclose how all their tax avoidance schemes work, not just the ones for which they are being criticised
  • Publishing warnings about tax avoidance schemes that are effectively being mis-sold, to make it easier for taxpayers to identify when they are on the receiving end of a hard sell by a disreputable promoter

They comes alongside plans to legislate to curb tax avoidance through a general anti-avoidance rule.

Companies could face fines of more than £1m if they flout the new rules.


Don't expect a list of avoiders to be pinned up on the door of your local tax office.

These proposals are aimed at giving HM Revenue and Customs more detail on the individuals using tax avoidance schemes, not as a public shaming exercise.

The tax authority will not publish people's confidential tax affairs.

It already receives a register - often populated by tax agents and company names using these legal schemes.

But, under these plans, HMRC will have a clearer sight of who it is dealing with if it decides to wrestle with the most "aggressive" schemes.

Mr Gauke acknowledged that tax avoidance - which is legal, unlike tax evasion - was difficult to define, adding that there was "always a barrier to be put up between unfairness and clarity".

He defined "aggressive" schemes as those which are "contrived" to defy the will of Parliament by depriving the government of expected revenues. He promised to "strengthen our description" of what constitutes tax avoidance to make schemes easier to control.

In a speech to the Policy Exchange think tank, Mr Gauke said HM Revenue and Customs already had an "excellent compliance record", adding: "We are building on the work we have already done to make life difficult for those who artificially and aggressively reduce their tax bill.

"These schemes damage our ability to fund public services and provide support to those who need it. They harm businesses by distorting competition. They damage public confidence.

"And they undermine the actions of the vast majority of taxpayers, who pay more in tax as a consequence of others enjoying a free ride."

He promised to deal with "cowboy advisers", who devise and sell schemes to divert money away from the Exchequer.

Mr Gauke told the BBC News Channel: "This is a message to people who might be tempted by an unfair tax avoidance scheme: if something looks too good to be true, it probably is too good to be true.

"It's unfair because other taxpayers are having to pay more as a consequence... We want to nip it in the bud and ensure that people don't get engaged in aggressive tax avoidance schemes."

Mr Carr last month confirmed making a "terrible error of judgement" after it emerged he used a complex scheme to reduce his tax bill.


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  • rate this

    Comment number 467.

    If we start moralising

    I dont think its right as single person tax payer, that i should be subisdising single mothers/parents on welfare deliberately having babies so that can have access to cheap housing&benefits. Not a right to have children

    I dont want my taxes going to India and china and pakistan when they can afford large armies, nuclear weapons and space technology and take our jobs

  • rate this

    Comment number 466.

    some people might regarding using shell corporations to avoid paying stamp duty as being immoral, others don't"

    Again, Parliament's intent is clear: if you wish to buy a property to own and to be lived in, then you pay a defined tax on the sale price. Having a company to buy it on your behalf and in a way that you personally benefit is thwarting Parliament's will. Morals don't come into it

  • rate this

    Comment number 465.

    Is there not a danger of what is legal and what is illegal being no more than what someone in a government dept say it is.
    Perhaps all we need is a clear unambiguious set of laws as distinct from rules, which are largely broken with impunity

  • rate this

    Comment number 464.

    Last available records (2006) indicate that 52 uk billionaires paid a whopping 3.7 million in tax between them. The other 2 paid the remaining 11 million.ie the correct tax.

    Huge defecit in the UK? Surely not - spending more than we can afford or simply not not receiving it in the first place?

    Still it's reassuring to know that we can still afford to subsidise bank bonuses.

  • rate this

    Comment number 463.

    If tax avoidance schemes are legal, I can't see why government departments feel they have the ethical right to "investigate" the avoiders. This initiative sounds like an attempt by the government to show they're doing something about an issue that they're not prepared to legislate on. The tax system needs to be simplified, with none of these corporations dodging tax responsibilities.

  • rate this

    Comment number 462.

    Tax affairs should be a matter of public record as should claiming state benefit - we need transparency in all our financial affairs with providing and getting public money. Transparency would end benefit and most tax fraud at stroke.

  • rate this

    Comment number 461.

    We need a tax system so simple that we will start to have unemployed accountants.

  • rate this

    Comment number 460.

    Why are people so unhappy about this. Mr Carr did not break the law, he used to loop holes provided by MP's and Government for there friends, good luck to anyone in paying less tax. We would all do it if possible but PAYE is to make sure the peasants such as us pay more for the benefit of the rich.

  • rate this

    Comment number 459.

    396. Michael Lloyd
    I cannot understand why these few people/companies are let off tax almost entirely.

    Because it is the ambition of all politicians, whatever party, to become a member of that elite group. It's not really in their interest to land themselves with higher taxes when they finish screwing up the country.

  • rate this

    Comment number 458.

    I like your stocks idea. Showcase a selection of the worst offenders in the olympics opening ceremony, and leave them in stocks to endure the sound of Paul McCartney.

  • rate this

    Comment number 457.

    440. Well I agree. Honestly, I don't know if I even care about them closing the loopholes, as I'm sure those who really want to will find new ones. I just wish they'd stop trying to pontificate to us about the morality of it, because as well as setting them up for embarrassment when their own affairs inevitably come to light, it implies that people pay taxes because it IS morally right.

  • rate this

    Comment number 456.

    Ok lets do this, but lets first look at the Tax situation of all the top EX minister, lets see where their money ends up after they left office !

  • rate this

    Comment number 455.


    Whilst 99.9% of people accept that murder is wrong, tax avoidance is more complex because for example, some people might regarding using shell corporations to avoid paying stamp duty as being immoral, others don't.

    As a tax cutting party I thought the Conservative would have understood that most people only want to pay as much tax as they legally have to.

  • rate this

    Comment number 454.

    I am UK citizen, I live outside the UK for over 20 years, I pay tax where I live. I get nothing from UK, no free healthcare - nothing. Should I die, my non-UK spouse is supposed to pay estate duty, UK spouses don't. Why shouldn't I take advantage of each and every tax reduction option? The taxman would come after me for £5 why should I pay more than necessary. I don't make the tax rules.

  • rate this

    Comment number 453.

    I suppose it depends on how you achieve "the minimum amount". I have an ISA, approved by the government, which I would not describe as "agressive". However, there have been schemes - such as K2 - which have used loopholes to avoid tax. I would have thought it to be quite easy, only schemes allowed by HMRI are permitted, other than that apply for HMRI approval.

  • rate this

    Comment number 452.

    Tax avoidance is NOT illegal. Those who do it are NOT committing a criminal offence. If the government doesn't like it they have to get their tax laws right. However, revealing details of a person's private affairs is an invasion of privacy. There is no other motive for it than to engender and inflame anger against them. Whoever is advising this government needs to seriously re-think their advice.

  • rate this

    Comment number 451.

    We are at a crossroads.
    The global economy is a very large complex system. What may seem like the flapping of the wings of a solitary butterfly on the periphery may lead to a tornado at its heart. It seems to me the choice is either democracy or plutocracy (neo-feudalism).

  • rate this

    Comment number 450.

    256 HappySnapper22

    I'm happy to tell you that tax avoidance is legal, has always been legal and probably will remain legal. It's tax evasion which is illegal. "Tax evasion is the illegal non payment or under-payment of taxes, usually resulting from the making of a false declaration or no declaration at all of taxes due to the relevant tax authorities, resulting in legal penalties"

  • rate this

    Comment number 449.

    What would happen if all workers in essential public services, who are currently paid under PAYE, decided to become self-employed, like so many MPs/Ministers who decide the fate of our NHS, fire services and police currently being privatised?

    In addition the most divisive taxes in the UK are fuel duty + VAT @ 20%. VAT @ 5% on gas/electric bills. Insurance premium tax @ 5%. Too much tax already!

  • rate this

    Comment number 448.

    Now that your society has made me fabulously rich can we not do taxes anymore please



    A rich Person


Page 20 of 43


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