• Thu
  • Aug 28, 2014
  • Updated: 4:03pm
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BusinessEconomy
TAX AVOIDANCE

UK lawmakers call for review of corporate tax

PUBLISHED : Wednesday, 31 July, 2013, 12:28pm
UPDATED : Wednesday, 31 July, 2013, 12:28pm

A panel of UK lawmakers has called on the government to conduct a review of Britain’s corporate income tax regime to tackle what it said was a “serious problem of avoidance”.

The House of Lords Economic Affairs Committee told the government it should force companies to publish summary tax returns, curb the tax deductibility of interest payments and consider penalising companies engaged in aggressive tax avoidance.

Tax avoidance has risen to the top of the international political agenda after revelations about the structures used by corporations such as Starbucks and Google to shift profits into low tax jurisdictions.

The companies say they follow the rules as they stand.

The Organisation for Economic Co-operation and Development (OECD), which advises rich nations on economic policies, has been asked by its members to draft new rules to stop companies shifting profits into tax havens.

The Lords Committee, which comprises members of Britain’s upper chamber, said the UK government should not wait until the OECD issues its recommendations - due in around two years - and instead should conduct its own review now.

The Lords also questioned the performance of the UK tax authority, Her Majesty’s Revenue and Customs, in tackling avoidance by companies and said the government should establish a parliamentary committee to scrutinise HMRC more closely.

HMRC does not give information about specific taxpayers to lawmakers, citing confidentiality rules. The Lords Committee suggested a panel of lawmakers could hear such evidence in secret, and thereby assess whether HMRC was being tough enough on big taxpayers.

The Committee noted that, of those who gave evidence to the inquiry, most of the people who praised HMRC worked for multinationals or their tax advisers who it said “have an interest in HMRC not becoming tougher”.

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