Tax law ‘won’t force firms to pay up’

THE Treasury has allowed voters to wrongly believe that a key anti-tax avoidance measure will force multinationals like Starbucks and Amazon to pay up, peers have complained.

A House of Lords committee said the general anti-abuse rule (Gaar) is a welcome move but urged ministers to correct a misconception that corporate giants would be “slapped with massive bills”.

It also called for a rethink of a crackdown on income tax reliefs which risk provoking “significant adverse effects on economic growth”.

And it questioned the workability of a move to stop rich foreigners avoiding stamp duty on luxury UK properties and the “length and complexity” of the legislation to do it.

Chancellor George Osborne said he has made battling tax dodgers a priority amid a public outcry over the tiny sums being paid by some huge firms and rich celebrities.

He announced the introduction of the Gaar in his 2012 Budget, along with the caps on income tax reliefs for business losses and the annual residential property tax package. All three have been examined by the cross-party sub-committee on the draft Finance Bill, which has published its findings a week before this year’s Budget.

Tory former Cabinet minister Lord MacGregor said: “There is a misconception that Gaar will mean the likes of Starbucks and Amazon will be slapped with massive tax bills. This is wrong and the government need to explain that to the public.

“Gaar is narrowly defined and will only impact on the most abusive of tax avoidance.”