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Labour let the banks run riot when they were in Government, Lib Dems leading clampdown on tax evasion

February 10, 2015 2:42 PM

It was under the Labour Government that UK tax officials were first handed information alleging tax evasion using the HSBC bank in Switzerland by up to 6000 people. (Tax evasion is illegal - tax avoidance is what anyone who claims whatever they can within the law isn't. If you claim allowances against income tax on your earnings, that's avoidance. If you under-report your earnings, or claim allowances you aren't entitled to, that's evasion. Penalties range from paying a multiple of the tax, a "fine" to jail time)

Liberal Democrats have long campaigned against evasion, which often uses offshore (foreign) bank accounts. Of the latest scandal, our Chief Secretary to the Treasury Danny Alexander says :
"Financial institutions who are proven to have colluded with tax evaders should have the full force of the law.
"We quite rightly prosecute and often jail people guilty of damaging our society through conventional crime and anti social behaviour.
"The way we treat systematic tax evasion should be no different. If that means jail for offenders and those that conspire with them, then so be it.
"Over the last 5 years, thanks to the Liberal Democrats, we have taken unprecedented action to clamp down on tax avoidance and evasion.
"These practices are socially, morally, and economically unacceptable and I will continue to work to make sure that the law, and the way it is applied, reflects that."

There have been calls for Lord Green, former chairman of HSBC and a junior trade and investment minister from 2010 to 20ccc to explain himself beyond his refusal to comment on HSBC past or present. Liberal Democrat Business Secretary Vince Cable, who had been his boss, has been guarded so far : "We simply don't know at present if Lord Green was aware of or condoned these practices."

Meanwhile, Liberal Democrat Leader Nick Clegg has said that Labour had been "letting the banks run riot of their watch"
Previously, the Liberal Democrats have published on their website


What is the difference between tax avoidance and tax evasion?

Tax avoidance means using legal ways to reduce the amount tax individuals or companies have to pay. Sometimes this is justified - ISAs are a form of tax avoidance to help people save. But a lot of the time, the system is abused.

Tax evasion is when individuals or companies deliberately do not pay the taxes that they owe and it is illegal.

What are you doing to tackle tax evasion?

We are putting £917 million into tackling tax dodging, including:
• Closing tax loopholes. For example we have closed Labour's tax loophole for private jets.
• Extra taxes to stop tax avoidance. For example we've created a Mansion Tax for tax dodgers that's impossible to avoid.
• Agreements with tax havens to declare information about people hiding money offshore
• Prosecuting more people who break the law, using 200 new criminal investigators
• Working with other counties to update the international tax system, which has been largely unchanged for 100 years and lets multinational companies avoid tax

How much extra money will the government get from cracking down on tax dodging?

By 2015, we will be getting an extra £9 billion each year thanks to our efforts.

What success have you had so far?

Here are just a few of our achievements:
• 33 tax loopholes closed
• 1,000 new tax investigators
• £9 billion being clawed back through deals with Switzerland, Liechtenstein and the Channel Islands
• £500 million clawed back from the 5,600 wealthiest individuals
• 262 banks signed up to the Code of Practice on Tax, stopping them from promoting tax avoidance
• An extra £1.4 billion by using better data to detect fraud
• Prosecuted 10 times more people for tax evasion than in 2010