'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 587.

    I think the chances of anything 'substantial' coming out of this rhetoric...is slim to none. The system is so entrenched, and the ruling elite so rich and powerful that this low level party political balderdash is just that...rubbish, and will never alter a system that has been designed to be exactly the way it is. Trillions hidden away...does anyone realise what we are dealing with here???

  • rate this

    Comment number 586.

    So. I'm very very rich and decide to move abroad. Like (say) Lewis Hamilton.

    Gonna tell me how you'd stop that? And why shouldn't I?


    not possible is it........unless......

    One day, someone finally is going to work out that 20% of something is a lot more than 50% of nothing.

  • rate this

    Comment number 585.

    @559 'deadpansean'
    Yes, a good post that summises mine and others. Withdraw all cash and put it in your carry on luggage, but only after you have opened an another account with your usual bank. They all operate on all tax haven islands just off UK mainland.

    Under Gordon Brown there was a warning not to bank off-shore and HMRC would hunt you down - well that worked - not.

  • rate this

    Comment number 584.

    Surely the law is the law! Or is it when it comes to the super rich and these people have more than enough money but it seems it is never enough? The law must be changed and a simple system is what we need not complex rules which no-one understands, not even HMRC or the Government is seems.

    Tax avoidance should be a criminal offence as it affects the whole economy not just the individual.

  • rate this

    Comment number 583.

    UK government takes through verious taxes more than half of what some people earn.These people are really working therefore to support the government rather than themselves and their families. No competent government should require this of people.What is received in return for the high amounts of tax paid?.....ever declining services and demands for more tax, hence the tax avoidance industry.

  • rate this

    Comment number 582.

    Any one with money would exploit a loophole to avoid paying tax. This is true of the very very rich and those with enough to save and afford an accountant. The first thing to be done is to stop schemes that allow money to be diverted into accounts that have allowances on them. Re dodging tax by lying about assetts, that is theft, and there are laws already to deal with them if there's the will.

  • rate this

    Comment number 581.

    The system is broken but instead the government blames individuals and organisations. If the loopholes were closed, this would not be an issue and the resultant tax take would probably wipe out the structural deficit without having to resort to austerity measures that don't work and QE that doesn't actually exist except on paper. Our current government simply likes to be seen to be doing their job

  • rate this

    Comment number 580.

    Although I have never been a fan perhaps we need to look again about replacing income tax with VAT or a tax like that where the rich have to pay it.

  • rate this

    Comment number 579.


    I don't know where to start with that comment. If you are a sole trader you actually would benefit far more as you can claim tax relief on the costs and capital allowances, subject to a deduction for personal use. This means you do not pay for your car out of taxed income. Speak to your accountant, it sounds like you need to.

  • rate this

    Comment number 578.

    568. The political elite are mere mouthpeices for the Rich elite. When we have massive losses such as the financial meltdown they are socialised meaning cuts. When things boom they are privatised meaning more for the already rich. Freedom and democracy are being destroyed as we speak thanks to the CRIMINALITY of deregulated finance capitalism circa 1986-present day.

  • rate this

    Comment number 577.

    "The theft perpetrated on a weekly basis from the working mans pockets, Is nothing more than a disgrace."

    Taxes pay for things that the working man either uses or hopes he will never have to. I can't tell if you're coming at this from a libertarian or anarchistic angle, so I don't know if you're being willfully ignorant or don't know any better.

  • rate this

    Comment number 576.

    If the tax dodgers paid their fair share"

    Let me guess.

    Your definition of 'fair share' is an amount that means you get loads more than you give.

  • rate this

    Comment number 575.

    556. Bobman
    @543 SeeDubya
    Actually yes, perhaps more as you pay your marginal tax rate based on the list price of the car each year via a complicated CO2 formula.

    Overcomplicated nonsense. If it costs me, as a sole trader, £2000 a month to lease and run a Lexus that is £2000 I don't pay income tax on, that's £800 income tax avoided. I'm sure a "good" accountant could make it cost way more!

  • rate this

    Comment number 574.

    If the tax dodgers paid their fair share we would not be in recession in fact we would probably be booming. Cameron's statement 'we are all in it together' has a very hollow ring. Why doesn't HMRC chase the the tax evaders rather than the ordinary guy who owes a few hundred quid. Whilst I agree everyone has to pay their fair share there is fair and there is outrageous. Or is this the easy option

  • rate this

    Comment number 573.

    I presume this will mean the end of airport Duty-free shops and day-trips to France for cheap booze and fags then"

    That's not avoiding tax. It's paying it at the rate of another EU jurisdiction and the UK government has no power to tax or confiscate any such personal imports.

  • rate this

    Comment number 572.

    This vast wealth must be called upon to help nations rebuild. Why is it not being done. Well done France at least you are showing the way. USA you are NOT in any shape or form a christain nation allowing such poverty at the bottom and disgusting wealth at the top. USA and UK will answer to God for this crime against society and the people by the disaffected Rich elite. Be sure of it.

  • rate this

    Comment number 571.

    Dave would not be where he is today without tax avoidance, how ironic is that?


  • rate this

    Comment number 570.

    "Nemesis of Socialism is Nigh
    The theft perpetrated on a weekly basis from the working mans pockets, Is nothing more than a disgrace"

    And is higher than it needs be because of the tax avoidance of the very wealthy. If we all paid what we're asked to we'd end up paying less.

  • rate this

    Comment number 569.

    Monetary systems are arcane, but alas we are just greedy monkeys...

  • rate this

    Comment number 568.

    I heard there's a gazillion quillion of tax that rich peple aren't paying and if they did we'd all live happily ever after and none of us would ever have to work again. No? Isn't that want you want to hear? Well, SOMEONE must be to blame for the economy, surely and it can't be us, can it? We borrowed and spent but it must be someone else's fault. Rich peple? Yes, must be their fault, not ours


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