The chancellor adhered to an unwritten budget convention by pledging to recoup around £1bn a year with a clampdown on tax avoidance and evasion.
The move by Rishi Sunak, who in his former hedge fund career worked for two funds with some operations based in the Cayman Islands, was outlined in the Treasury’s red book of budget measures and stated that a further clampdown on aggressive tax dodging would recover almost £5bn over the next five years.
The document says: “Since 2010, the government has secured and protected over £200bn of tax that would have otherwise gone unpaid. The budget builds on this work and announces further action to tackle tax avoidance, evasion and other forms of non-compliance that will raise an additional £4.7bn between now and 2024-25.”
The programme includes measures to pursue promoters of aggressive tax avoidance schemes and “investment in additional compliance officers and new technology for HMRC”.
The statement lengthens a list of pledges by the chancellor’s predecessors. Philip Hammond’s 2017 budget announced “18 further measures” to tackle avoidance, evasion and non-compliance that were “forecast to raise a further £4.8bn between now and 2022-23”.
Before that, George Osborne was fond of using similar passages during his budget speeches, including saying in 2011 that his measures would “raise £1bn [a year] and £4bn over the parliament” in the harshest attack “on tax avoidance in any budget in recent years”.
Osborne’s line was similar to one used in Alistair Darling’s 2009 budget speech, although the Labour chancellor was less ambitious. Darling said: “We have identified loopholes and schemes which, when closed, will result in £1bn of extra revenue over the next three years.”
Despite the frequent use of pledges to crack down on tax avoidance and evasion, there are differing views on how effective these efforts eventually prove to be.
The Office for Budget Responsibility’s reaction to the Treasury’s budget figures stated: “HMRC has introduced a range of policy measures designed to tackle offshore tax avoidance and evasion, including providing opportunities for voluntary disclosure, information exchange agreements and penalty regimes.
“As we have reported on several previous occasions, the yield from these measures is highly uncertain given the paucity of reliable data and the tendency for individuals engaged in these activities to seek alternative opportunities.”
