Labour cares more about tax dodging by hedge funds than hedge cutters, Ed Miliband has said, after his shadow chancellor suggested it was a good idea to get receipts for all work carried out by gardeners or cleaners.
Labour emphasised that its priority was sorting out tax avoidance by corporations after senior Conservatives claimed comments by Ed Balls about keeping records of cash transactions were “ludicrous”.
Labour has been making political capital out of the Conservatives’ failure to deal with large-scale tax evasion by account holders at HSBC’s Swiss arm, and it has promised to get a grip on the wider problem of corporations using complicated schemes to avoid paying tax in the UK.
However, Balls took Labour’s argument on tax avoidance one step further on Sunday when he appeared to suggest everyone should help take responsibility for ending tax evasion by keeping proper records of cash payments.
Speaking on Pienaar’s Politics on BBC Radio 5 Live, he said: “The right thing to do if you are having somebody cut your hedge for a tenner, is to make sure they give you their name and address and a receipt and a record for the fact that you have paid them.”
Asked whether he personally upheld such standards, Balls replied: “Absolutely. That’s because I am the shadow chancellor and I’m extremely careful about these things. Over my life, have I ever given people a tenner and not given a receipt for it? Probably yes.”
But speaking on Monday morning, Miliband clarified Labour’s message, saying: “We’re all clear: the hedge funds … Dealing with these issues is more important than the hedge cutters, and I think that has been a clarity of view right across our shadow cabinet.”
His comments came after Balls’s remarks were immediately seized on by Iain Duncan Smith, the work and pensions secretary, who said he did not believe that “anybody in the country” follows this practice.
“What it exemplifies is Labour’s complete lack of understanding about how business works and, actually, how people get by,” he told BBC Breakfast.
“Here we have a man [who] would be the chancellor who is wandering around saying Big Brother is going to watch you carefully that if you do any tax transactions and don’t keep receipts, somehow they’re going to punish you. I find that absurd.”
David Cameron’s official spokesman said he also agreed with Duncan Smith. “He would agree with IDS [Iain Duncan Smith], who I think put it quite well this morning. If you have one-off payments for something, then you may well pay cash. I think the onus is on the trader, who is responsible for making sure they pay the taxes that they owe.”
Chuka Umunna, the shadow business secretary, said Balls had simply been talking about “good housekeeping and admin”.
