David Gauke: Tax Avoidance Deal For Vodafone Led To 'Increasingly Hysterical' Reaction From UK Uncut

Treasury Minister: Tax Avoidance Debate Has Become 'Increasingly Hysterical'

Arguments about tax deals reached between government and big companies like Vodafone have become "increasingly hysterical", Treasury minister David Gauke has said.

Speaking at Westminster on Monday morning to a meeting of the Policy Exchange think tank, Gauke outlined a consultation which the government hopes will lead to a clampdown on companies conducting "regressive" and "morally repugnant" tax avoidance.

But the Exchequer Secretary to the Treasury was at pains to point out that many ways of dodging the taxman were legitimate, and suggested groups like UK Uncut were operating at the "fringes of politics" and making claims about tax deals which were inaccurate.

"Having a lower tax bill does not mean you have engaged in morally repugnant tax avoidance," he said, saying that not paying tax on pension contributions was an example of where the government encouraged it.

But companies which dreamt up elaborate structured finance products, designed to aggressively reduce tax burdens for the super-rich would be targeted, said Gauke, with a "name and shame" approach designed to discourage others from doing business with such firms.

The government is responding to a wave of scandals involving offshore tax products and complex products where wealthy people's incomes are paid back to them in the form of a loan.

Celebrities including Jimmy Carr and Sir Chris Hoy have been implicated in the deals, which while legal have been described as "morally repugnant" by chancellor George Osborne.

Treasury Minister David Gauke was trying to explain the difference between acceptable and "repugnant" avoidance

But many want to see the government go further and show no lenience towards big firms like Vodafone, which in 2010 reached a compromise deal with HM Revenue and Customs over its tax affairs.

Campaigners believe Vodafone was "let off" as much as £8bn in tax in a deal with HMRC, claims the both the company and the government vigorously deny.

Gauke reminded the audience in London on Monday that the settlement had been endorsed by the government's accounting watchdog, the National Audit Office, and rejected suggestions that HMRC would ever let a firm off lightly.

"Those who say that have never met a Treasury minister, in fact they've probably never met a politician and they've certainly never met an HMRC tax inspector," he insisted.

Vodafone suffered another PR embarrassment last month when it emerged that it paid no corporation tax in the UK last year. There is no suggestion that the government's consultation being outlined on Monday would address these concerns.

Gauke acknowledged that "tax avoidance will always be with us", but said that the kinds of complex structured products which could see companies named and shamed would involve a "sniff test".

"If it looks too good to be true, it probably is too good to be true," he said, amid questions and calls for him to be more specific about what kinds of tax avoidance products would be named and shamed. Gauke said it could fall on professional bodies like the Charted Institute of Taxation to blacklist firms that failed the sniff test.

The government's announcement comes as a report suggests that worldwide the super-rich are dodging as much as £13 trillion in tax, although Gauke insisted that compared to other western countries the UK's tax gap was comparatively low.

The minister claimed that last year the government collected £474bn in tax revenues, with £35bn forming the "tax gap" of unpaid revenue. Gauke suggested that offshore tax avoidance products would be top on the list of targets, along with those which involve "loans in lieu" paid back to wealthy investors, similar to the K2 arrangements used by Jimmy Carr.

The comedian decided to stop using the products after David Cameron intervened in the debate around tax avoidance last month, singling out Carr for criticism.


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