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The state is denied £25 billion each year by wealthy individuals and corporations exploiting tax loopholes, according to new research.
A study conducted by accountant and tax specialist Richard Murphy includes the analysis of 344 sets of accounts from Britain's 50 largest companies, and analysis of HMRC and other official statistics.
They show that the companies' effective corporation tax rate is 22.5%, and they almost always pay 5% less tax on average than they declare in their accounts. In the seven years up to 2006, the companies' effective tax rate fell by 0.5% each year.
In total, say the findings, the public purse loses £12 billion per annum as a result of corporations' actions.
The report, produced on behalf of the TUC, also aims to show how the so-called super-rich avoid paying their fair share of tax; £3.2 billion is lost by turning earned income into investment or by income shifting.
Another £3.8 billion, says Mr Murphy, is lost moving transactions out of the UK, £0.5 billion by turning income into a capital gain, and £4.8 billion from various kinds of tax planning.
In response to these figures, the TUC — in a pamphlet called Touchstone — has called for a number of corrective measures, including:
- A minimum rate of tax to be paid by all those earning more than £100,000 a year.
- A stop to HMRC staff cuts so that there are sufficient resources to effectively collect tax.
- The non-domiciled 'tax loophole' to be abolished.
- Capital gains on assets held for less than a year to be charged to income tax.
