Ed Balls vows to crack down on tax evasion

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Media captionShadow Chancellor Ed Balls: "We want to collect the tax. We'll toughen up the law"

The shadow chancellor has promised that a Labour government would crack down on what he called "systemic tax evasion".

Speaking on the BBC's Andrew Marr Show, Ed Balls drew a distinction between families who legitimately plan their tax affairs and those who, in his words, "set up false structures".

He accused the Conservatives of "turning a blind eye" to tax evasion.

Conservative Party chairman Grant Shapps said Labour "says one thing on tax avoidance, but does another".

Mr Balls said: "We are the party who will crack down on tax planning and on systemic practices, where people are trying to avoid paying the tax Parliament intends."

"Conservatives from the Treasury and Number 10 turned a blind eye to what was happening at HSBC and that is what makes people angry," he added.

'False structures'

Mr Balls said some schemes to reduce tax payments were legitimate, citing cases such as individual savings accounts (ISAs) and tax relief for entrepreneurs.

The shadow chancellor continued: "But if people are actually setting up false structures to avoid paying their tax or going off to live in Switzerland in order to avoid paying their fair share in tax, we will crack down."

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The shadow chancellor acknowledged that HM Revenues and Customs (HMRC) was under huge pressure following cuts in staff numbers.

He vowed to put an emphasis on making sure "they have the resources they need, the legal frame work is right and the culture is tough".

Extra powers

On Saturday, Ed Miliband announced that Labour would launch a "root-and-branch" review of HMRC, saying he believed it could "do a much better job" of tackling tax evasion.

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Meanwhile, the Chief Secretary to the Treasury Danny Alexander revealed that he has asked HMRC to advise him on whether it needs extra legal powers or whether new laws need to be introduced to prevent people from conspiring to enable tax evasion.

Speaking on the BBC's Sunday Politics show, he said: "If they come back and say we need extra powers or resources... I'll make sure they have what they need."

The comments from the front and shadow front bench teams come after a week in which the issue of tax avoidance has been at the top of the political agenda.

Donations cap call

Following allegations that HSBC had helped hundreds of wealthy individuals avoid or evade tax, Mr Miliband attacked the Conservatives over what he called their "dodgy donors".

He then became embroiled in a row with former Tory party treasurer Lord Fink about the peer's tax arrangements.

Mr Miliband has been accused of hypocrisy due to the use of a deed of variation in the ownership of his family's house, which can be used to cut inheritance tax liabilities.

When Andrew Marr compared this with the family tax trust set up by Lord Fink, Mr Balls defended his party leader.

He said: "In the case of Ed Miliband he paid all his taxes. He paid his capital gains tax."

'Entirely synthetic'

But Mr Shapps said: "There is an open question as to whether Ed Miliband avoided the full inheritance tax liability he owed by using a 'Deed of Variation'."

He called on Mr Miliband to "publish this document to clear up this matter".

Conservative MP and former chancellor Ken Clarke spoke out on BBC Radio 5's Pienaar's Politics, dismissing the furore over tax avoidance as "bogus" and "entirely synthetic".

He recommended instead a cap on donations to political parties, predicting it could help to "avoid conflict of interest, suggestions that you're getting too dependent on particular interest groups".

This would have to be accompanied by an increase in state funding to parties, which he acknowledged would be resisted by a "furious" public.

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