‘Serious’ Tax Avoidance at 5-Year Low

According to a recent report, incidents of ‘serious’ tax avoidance – where the deficit is worth £50,000 or more – is the lowest it has been for 5 years. Between 2010/11 and 2011/12, there was a 16% drop in the number of such recorded cases, though it is trickier to tell if tax avoidance as a whole is increasing or decreasing.

One explanation for these declining figures could be found in the HMRC’s recent crackdown on tax evasion, particularly overseas structures. Over the past 12 months, HMRC has side-lined £1 billion to tackle offshore tax evasion and £5 million to recruit 100 new Affluent Compliance officers, as well as slapping a hefty fine on evaders, worth up to 200% of the tax owed. These are all part of on-going efforts to prevent the wealthy from concealing their assets outside of British jurisdiction. Plans to create a public register of shell companies were discussed at this month’s G8 Summit, which would go further in the battle against offshore.

On Sunday 23rd of June, Starbucks, notable user of the ‘Double Irish’ offshore arrangement, paid £5 million in UK Corporation Tax, the first payment of its kind since 2009. The US coffee chain faced particular criticism last year when it was revealed that it had declared just a single taxable profit in Britain in 15 years.

Starbucks’ actions seem to suggest that tax havens’ (as we know them) days are numbered. However, whether this apology payment (the first instalment of a total £20 million pledged last year) will be enough to keep the brand off the taxman’s radar – and out of the media – only time will tell.

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