A new report from the UK Government's Public Accounts Committee released this week shows that around £5bn is lost every year due to tax avoidance. It advised Revenue and Customs (HMRC) to get "more robust in its approach".
Commenting before the publication of the report on Tuesday, Alex Prats, Christian Aid’s Principal Adviser on Economic Justice, said: "Tax avoidance is a major problem across the world and it’s especially devastating for developing countries, which lose billions every year as a result of tax avoidance by multinationals.
"Their tax authorities also have to contend with multinational companies’ armies of highly-paid accountants and tax lawyers. It’s not a fair fight. The UK could very easily help poor countries start catching up with multinationals by using next month’s Budget to require such firms to reveal the tax avoidance schemes that affect developing countries.
"The Chancellor has promised action at the G8 and G20. He should also use his power, under bilateral and multilateral treaties, to tell developing countries’ tax authorities about the schemes, and help them recover taxes dodged by British multinationals."
The Public Accounts Committee claims that the promoters behind tax avoidance schemes are "running rings" around HMRC. It also advises looking at the Australian system which has much stronger controls in place to deter tax cheats
Australian tax firms have to submit schemes for approval before they can market them. In the UK, avoidance schemes are set up in the knowledge that it will take a while for the government to catch up with them. There are no penalties for promoting them.
Margaret Hodge, MP, chair of the Public Accounts Committee said: " HMRC publicises details of schemes that do not work but does not name the promoters or the clients. We have seen how public anger and consumer pressure can influence large companies, such as Starbucks, to behave more responsibly."
She added: "Australia has also introduced powers to fine those who promote schemes that could not be reasonably expected to work or comply with the advance ruling system, We encourage HMRC to look seriously at whether these and other measures could be effective in the UK."
Christian Aid, together with CAFOD and other agencies is part of the Enough Food for Everyone IF… campaign, which is calling for the Budget to include this important reform.
For more information about the work of Christian Aid visit: www.christianaid.org.uk