US-style tax regulation is the way to go for UK
Filed under: Tax
A cross-party committee of MPs has called on the government to bring in tough rules that would mean foreign institutions would have to automatically disclose information about UK citizens' tax and savings affairs and that of companies operating in different countries.
The legislation is inspired by US Facta rules (Foreign account tax compliance act) which means banks and other financial institutions have to disclose their US customers' affairs. The banks et al aren't much happy about it because they have to bear the cost and responsibility of disclosing the information – but what the US wants, the US gets.
A report by the International Development Committee said that following in the footsteps of the US would help prevent international tax evasion.
The US is known for its no-nonsense approach to collecting tax and the punitive measures it takes against people who try to dodge the tax system.
Following in the US's lead would send out a clear message that our government is out to make everyone pay their fair share of tax. We have heard for a long time that the coalition wants to make everyone pay their bit but still over the following months we have heard details of the wealthiest in our society using clever tax scheme to avoid doing so.
If it's not comedian Jimmy Carr using the K2 tax avoidance scheme it's Take That's Gary Barlow putting his money into the Icebreaker scheme. I'm not saying what they have done is wrong, these are legitimate tax avoidance schemes and not tax evasion, the latter of which is illegal.
What I am saying is that these schemes are exactly the sort of thing that the government should be clamping down on. Ordinary people don't have the luxury of employing expensive accountants and tax advisers to save them money, and the government should be more proactive about these schemes.
Often tax avoidance schemes are based in different jurisdictions to the UK. The introduction of Facta-style regulation would help the government tackle popular tax avoidance schemes before any more money is squirrelled away offshore.
That way tax revenues would be boosted and the government could really ensure everyone is paying their fair share.