UK guilty of "facing both ways" on tax avoidance, according to new Westminster report

APPG chair Margaret Hodge - credit PA

The UK Government has been guilty of “facing both ways” on tax avoidance, according to a new Westminster report.

A report from the All-Party Parliamentary Group on Responsible Tax found that states are still falling short in the battle against aggressive tax planning by big businesses, with MPs warning that current efforts are little more than a temporary “sticking plaster” solution.

It warned that the global tax system is struggling to remain fit for purpose with the growth of multinational companies operating in a digital environment, while accusing the UK of “undermining” efforts to tackle avoidance.

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The APPG recommended the UK’s Overseas Territories and Crown Dependencies should be made to follow the same rules as the UK itself, while calling for new rules forcing companies publish information on their activities in every country they operate.

APPG chair Margaret Hodge said: “The government has been facing both ways. While publicly proclaiming their determination to tackle global tax avoidance, they have been encouraging these practices by changes they have made to the UK tax system and by refusing privately to agree to some key OECD proposals.”

Theresa May set out her intention to improve tax transparency upon taking over as Prime Minister.

She said: “It doesn’t matter to me whether you’re Amazon, Google or Starbucks, you have a duty to put something back, you have a debt to your fellow citizens, you have a responsibility to pay your taxes.”

But Oxfam called on May to go further in attempting to crack down on tax avoidance.

Oxfam’s Head of UK Policy, Programmes and Campaigns, Sally Copley, said: “Today’s report is a welcome admission by MPs that the world has so far failed to tackle tax dodging. Until governments act to make the tax system fairer and more transparent, people in the world's poorest countries will continue to pay the highest price, missing out on billions in lost revenue that could fund schools and hospitals.

“The Prime Minister must go further than the previous government if she is to fulfil her ambitions to tackle tax dodging.

“As a starting point, she should deliver on the report’s recommendations to make the UK’s Overseas Territories and Crown Dependencies follow the same rules as the UK itself, and make British companies publish reports on their activities in every country where they operate.”