Top tax crackdown raises £500m

A crackdown on wealthy tax dodgers has resulted in an extra £500 million flowing into the Treasury's coffers, George Osborne told MPs.

The Chancellor said the Government and HM Revenue and Customs (HMRC) were committed to tackling tax avoidance schemes used by firms and rich individuals.

"Later this week we will be confirming that we have raised half a billion pounds in extra tax from high net worth individuals through our efforts through the HMRC," he told the Commons at Treasury question time.

The Chancellor said the £500 million boost was the result of a "better than expected performance" by the high net worth individuals unit. In total, efforts to close loopholes and tackle avoidance had resulted in £3 billion of extra tax revenue.

Mr Osborne said: "This coalition Government has dramatically increased pressure against those who avoid and evade their taxes. As a result of our efforts, tax revenues from our compliance and enforcement are £3 billion higher than when we came to office. We have tackled disguised remuneration, (we are) dealing with stamp duty enveloping and we are introducing a general anti-abuse rule."

Mr Osborne said under Labour the gap between what should have been collected and the sum that actually went to the Exchequer rose from £35 billion to £39 billion.

Treasury Select Committee chairman Andrew Tyrie warned against the use of retrospective tax measures such as those taken against Barclays following its use of an "aggressive" avoidance scheme. Mr Tyrie said: "The best way to prevent loss of revenue from avoidance schemes is to work much harder to create a simpler tax system in the beginning."

The Chancellor agreed that was the best approach "but inevitably in the tax code of a Western democracy there are going to be opportunities for abuse and avoidance which we need to deal with".

He added: "I think the House of Commons should only sanction retrospective taxation when it is very clear that the explicit wishes of Parliament have been abused and avoided."

Referring to "one particular UK bank", Mr Osborne said: "We did act retrospectively because that was in clear breach of what Parliament had expressed. "I'm very pleased to note that the new chief executive of that bank (Anthony Jenkins) has today said that his bank will be scaling down its tax structuring activities."