LABOUR leader Ed Miliband has insisted his party is more interested in tackling tax dodging by “hedge funds” rather than “hedge trimmers” after Ed Balls came under fire for suggesting people should insist on getting a receipt for the smallest cash-in-hand jobs.
The shadow chancellor said he always demanded a written record, even if it was merely for £10 to trim a hedge, because it was the “right thing to do”.
Mr Balls’s comments were criticised as “absurd” by work and pensions secretary Iain Duncan Smith, who said it demonstrated Labour’s “complete lack of understanding” about business.
Shadow business secretary Chuka Umunna dismissed the row as “a storm in a teacup” and insisted Mr Balls was not suggesting that everyone had an obligation to follow his lead by demanding receipts for minor cash-in-hand jobs.
The remarks have fuelled the political row about tax avoidance after revelations about HSBC’s Swiss arm and Mr Miliband’s claim that the Tories were funded by “dodgy donors”.
Mr Miliband, who was launching Labour’s strategy to boost prosperity at Jaguar Land Rover’s plant in Wolverhampton, said: “The point that I would make, that Ed Balls would make, that all of us would make, is what’s important is that people pay their fair share of taxes and that’s what counts. We have always said that and we have always made that clear.”
He added: “I think that we are all clear, the hedge funds – and hedge funds dealing with these issues – is more important than the hedge cutters. That is a clarity of view right across our shadow cabinet.
“I think there is a big contrast here between a party that is willing not to turn a blind eye to tax avoidance but to take it on and to deal with it and to change the rules and to change the law, because I think this is a huge issue, and a government that has, frankly, failed on this.”
Asked on BBC Radio 5 Live’s Pienaar’s Politics about what constituted tax avoidance, Mr Balls said: “The right thing to do if you are having somebody cut your hedge for a tenner is to make sure they give you their name and address and a receipt and a record for the fact that you have paid them.”
Appearing alongside Mr Miliband at Jaguar Land Rover, Mr Balls insisted he was not trying to end the “cash economy” but it was important that tax rules were followed by even the smallest firms to prevent “cowboy operators” gaining an unfair advantage over law-abiding competitors.
He said: “Ed’s point about tackling tax avoidance, that is important for the smallest firms, companies as well who are playing by the rules. That does not mean that you can’t have a cash economy, but you have got to make sure the legitimate small businesses get the proper support they deserve from HM Revenue and Customs and we will make sure they do.”
Mr Duncan Smith said he did not believe anyone else in the UK followed Mr Balls’ advice on receipts.
The Tory Cabinet minister said: “I don’t think anybody in the country probably does that unless they sit down and they do it as part of a process; in other words, if you are employing somebody in which the objective is paying them cash as a process of your business, then of course I suspect most businesses do keep some kind of record, that’s the right thing to do.
“But if you have a one-off payment for something and you pay cash, I shouldn’t think anybody in the country does that necessarily … what it exemplifies is Labour’s complete lack of understanding about how business works and, actually, how people get by.”
Mr Umunna insisted that his colleague was not “demanding” that people keep “every single receipt that they get”.
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