Budget: It could be a bad day for tax avoiders

22nd June 2010

Richard Murphy Richard Murphy

Hidden in the small print of the Budget press notices is the following announcement:

As part of an approach to develop sustainable responses to avoidance risk, the Government intends to examine whether the option of a General Anti-Avoidance Rule should form one element of strengthened defences. This will be part of wider work on improvements to the tax policy-making process.

There had to be some good news in amongst the gloom today. This is just a small sliver of it. Undoubtedly in the notice to appease the Lib Dem coalition partners such a measure is something the TUC has long argued for – and which is is credited with having promoted in recent years – even inside HM Treasury.

It’s an important announcement if followed by action because a General Anti-Avoidance Rule does two things. Firstly it should stop artificial tax planning by basically outlawing it and secondly it should cut down enormously on the amount of tax legislation needed – allowing time to be devoted to more pressing issues of tax reform.

No one should be counting chickens about this as yet, but it is a start.

GUEST POST: Richard Murphy is a chartered accountant, and was Senior Partner at Murphy Deeks Nolan until he and his partners sold the firm in 2000. In parallel with his practice career, he has been chairman, CEO or finance director of more than ten SMEs. Since 2000 Richard has been increasingly involved in taxation policy issues. He is a founder of the Tax Justice Network and director of Tax Research LLP, which undertakes work on taxation policy for a clients including governments, commercial organisations, aid agencies and pressure groups in the UK and abroad (including the TUC, which he advises on tax issues). Richard is a visiting fellow at the Centre for Global Political Economy at the University of Sussex, External Research Fellow at the Tax Research Institute, University of Nottingham, and a prolific and influential blogger at Tax Research UK.

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