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We are coming to get you, Alexander tells ‘tax dodgers’

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Taxes are ‘getting fairer’ thanks to the Liberal Democrats, Danny Alexander told the party conference today. The Chief Secretary to the Treasury said it was ‘morally necessary’ to do more to tackle tax evasion and avoidance. His party would continue to argue for a mansion tax, which would be ‘simple, fair and unavoidable’.

‘Tough Budget negotiations’ with the party’s coalition partners had ensured that next year 24m people would benefit from the largest ever increase in the personal tax allowance. ‘Very soon,’ he said, ‘no-one will pay income tax at all until they are earning more than £10,000’.

At the next election his party would promise to raise the figure to £12,500, so that ‘you don’t pay any income tax until you’re earning more than a full-time salary on the minimum wage’.

The government had made a ‘good start’ in raising taxes on the wealthiest: ‘High earners get less tax relief on their pension contributions; you can’t dodge stamp duty any more by putting your home in an offshore company; banks pay a special new tax – paying £10bn over this parliament; capital gains tax is up – ending the scandal that a hedge fund manager could pay less tax than their cleaner.’

Alexander said he had announced in 2010 ‘an extra £900m to get tough on tax dodgers’ and deliver an additional £7bn a year in tax revenues by the end of the parliament. ‘I can announce that we are on track to raise an additional £4bn,’ he said.

Under the terms of the 2010 spending review HMRC was required to reduce resource spending by 15% and capital spending by 44% over four years, with £900m of those savings being recycled to ‘transform’ HMRC's work against avoidance, evasion and criminal attack.

Affluent Unit

HMRC’s new Affluent Unit was already a success, Alexander told delegates. ‘It has raised £44m in less than a year.’ The unit’s remit would now be expanded to include ‘the wealthiest 500,000 people in this country, those with a net worth of over £1m’.

HMRC and HM Treasury said in a joint press release: ‘Launched in October 2011, HMRC’s Affluent Unit brings together 200 specialists from across the department using new and innovative risk assessment techniques to identify areas where wealthy individuals are avoiding or evading taxes and duties.The unit will be expanded to deal with taxpayers with a net worth of £1m instead of the current £2.5m. An extra 100 inspectors and specialists will be recruited to cover the tax affairs of 200,000 more individuals, an increase from around 300,000 under the current threshold, to the 500,000 wealthiest people in the country.’

‘We are coming to get you’

The vast majority of taxpayers in this bracket do pay their fair share, Alexander said. ‘But we have this message to the small minority of wealthy people who don’t play by the rules – we are coming to get you and you will pay your fair share’.

He continued: ‘Tax dodging is not limited to our own shores. So when I say we are coming to get you and you will pay your fair share, I mean those hiding their assets offshore too.’

Liechtenstein Disclosure Facility

The Labour administration had expected in 2009 that the Liechtenstein Disclosure Facility would raise £1bn in UK taxes, Alexander said: ‘Under this government more people are fessing up, so we are doubling the size of the team focused on Liechtenstein and with that extra effort we can recover much more … up to three times more, £3bn.’

HMRC said: ‘The LDF is an agreement between the governments of Liechtenstein and the UK which enables UK residents to declare previously undisclosed liabilities to HMRC. It is part of HMRC's broader drive against offshore tax evasion and will run until 5 April 2016. The HMRC team working on the LDF is being doubled in size and is now expected to bring in £3bn, over £2bn more than anticipated when the agreement was signed.’

Responding to the announcement, Ben Jones of the international law firm Eversheds said many people considered the LDF to be ‘a very generous amnesty scheme that fails to adequately punish serious and long-term tax avoidance or extract a fair amount of tax in respect of persistent avoidance’. The true test of the government’s campaign on tax avoidance would only come ‘after the inflated tax revenues generated by generous tax amnesties such as the Lichtenstein facility have run their course’, he said.

Other measures

Taxpayers’ money ‘should not be funding tax dodgers’, Alexander told delegates as he announced that proposals to tackle avoidance by a small minority of the companies that do business with the government would be set out later this year.

HMRC said it had been tasked, together with the Cabinet Office, with 'looking into how the government can use the procurement process for government contracts to deter the very small minority of companies and individuals that do so from evading tax and using aggressive tax avoidance schemes'.