Tax avoidance: RBS confesses
This is very significant. After endless denials by corporate Britain, one of the world’s biggest banks has finally admitted it deliberately avoided tax to the tune of £500 million. It has confessed that it had a department within the bank dedicated to establishing the avoidance schemes. That Department has now been closed down.
For those who have been campaigning hard on this issue and have had to listen to all the denials, dismissals and ridicule from big companies, this is massive proof that they were right. No-one will believe that RBS was the only offender – the onus is now on other big companies to come clean.
But it is also an embarrassment for the Government. It has always been claimed that the HMRC works very hard and successfully to prevent tax avoidance. It is true that the HMRC does work very hard but they are hobbled by a weak legislative framework which means they are always playing cat and mouse with the avoidance industry. As soon as one scheme is closed down, well-paid corporate accountants and lawyers are already setting up new schemes. There can now be no argument against establishing a general anti-avoidance principle (GAAP) which would give the HMRC the power to charge tax on any scheme which has been set up purely for the purpose of avoiding tax rather than having to outlaw each new scheme as it is established.
The Chancellor could introduce a GAAP in the Budget in April and who would be brave enough now to deny its necessity? I wonder how George Osborne would respond to that? For all the headlines and political debate about tax avoidance and tax havens in recent months, the Tories have been mighty quiet on the issue. It couldn’t be anything to do with this, could it?