George Osborne will today unveil a major clampdown on both tax evasion and tax avoidance, in an attempt to claw back an extra £2 billion for the Treasury every year.
The Chancellor will say it is “unacceptable” that some companies and individuals fail to pay “their fair share” of tax.
Unveiling the clampdown, the Chancellor will announce that officials from HM Revenue and Customs (HMRC) will be given extra funding of £154 million over the next two years to crack down on high earners who aggressively avoid or evade paying tax.
The announcement comes as MPs claim that Starbucks, Google and Amazon have “immorally” minimised their tax bills in the UK.
The Commons public accounts committee said there were a number of multi-nationals exploiting laws to move profits generated in the UK offshore. In a damning report, published today the MPs also hit out at the companies for the “unconvincing and, in some cases, evasive” evidence they gave to explain their low payments.
Mr Osborne is also expected to confirm a deal with Switzerland that will raise more than £5bn in previously uncollected taxes from Swiss bank accounts over the next six years, with a similar agreement also coming into force with the United States.
As part of today’s announcement, the Chancellor and Chief Secretary to the Treasury Danny Alexander will unveil a new centre of excellence to tackle offshore tax evasion and promise 100 extra investigators to pursue the wealthy.
Treasury officials are working on plans to replicate an information exchange agreement between Britain and the US with other countries to stop international borders being exploited to avoid tax.
According to government sources, it means the coalition government will have recouped £22bn by 2014-15.
It is part of a £10bn clampdown on tax dodging set to be unveiled in Wednesday’s Autumn Statement.
Mr Osborne said: “The government is clear that while most taxpayers are doing their bit to help us balance the books, it is unacceptable for a minority to avoid paying their fair share, sometimes by breaking the law.
“We are determined to tackle this problem and HMRC are making good progress, but we are giving them additional tools to bring in more.”
Sources close to Mr Alexander said the package was part of the fairness agenda, which the government hopes will see the rich pay more in tax in exchange for the Liberal Democrats supporting £10bn of savings on welfare.
Today, Mr Alexander will say: “In restoring the public finances, our first priority must be to tackle those who avoid or evade tax. It is simply not fair that at a time when most people are making a contribution to balancing the nation’s books, there is a small minority of taxpayers who try to escape their responsibility.”
The coalition will hope the measures will counter attacks by Labour, which says the coalition is hitting the poor while giving tax breaks to the rich.
Shadow chancellor Ed Balls was on the offensive again yesterday over the decision to slash the top rate of income tax for those earning £150,000 or more from 50p to 45p.
Mr Balls said: “Why should pensioners pay more? Why should fuel be going up? Why should tax credits be cut? Why should people on housing benefit be thrown out of their homes? Why will millionaires get a tax cut on that scale?
“There isn’t pain coming compared to the giveaway they’ve already had. But there is a millionaires’ tax cut, £3bn, over £100,000 to 8,000 millionaires.”
In answer to the criticisms in the public accounts committee report on tax avoidance by multi- nationals, Mr Osborne and Mr Alexander will promise an extra £77m a year investment for the next two years.
This will also include more support to speed up work on challenging transfer pricing arrangements, which have been used by multi-nationals to move money around different tax jurisdictions.
The extra investment is on top of the £900m already announced, to deliver an extra £7bn a year in unpaid tax.
Today, HMRC will also publish a report setting out its current approach to tax evasion, particularly the use of third- party data.
Through the new HMRC centre of excellence, the department will announce plans to develop a comprehensive strategy for tackling offshore evasion, to be published in spring next year.
The centre’s team will be made up of HMRC staff and external experts, who will look at how the Revenue can best use data to identify offshore tax evasion, review HMRCs legal powers and work with other tax administrations to close the net on offshore tax evasion. There will also be money to improve the Treasury’s computer.
Plans are also being drawn up to put reform of international rules around corporation tax at the top of the agenda during the G7 and G8 meetings next year.
With Britain set to chair the meetings of the governments of the world’s biggest economies, Mr Osborne has promised to put corporation tax avoidance at centre stage.
That promise follows the Chancellor’s joint initiative on this issue with Germany, and now backed by others, announced at the G20 meeting in Mexico last month.
Then, Mr Osborne and his German counterpart, Wolfgang Schauble, called for concerted international co-operation to strengthen international tax standards.