Labour have accused the Treasury of failing to fully tackle tax avoidance as it claimed to have identified a £2.6bn black hole created by downgraded revenue forecasts.
John McDonnell, the shadow chancellor, said that information buried in the small print of last month’s Office for Budget Responsibility report showed that three tax avoidance measures were now expected to raise significantly less than when they were first announced.
McDonnell said that collectively the three schemes would now raise a total of £2.6bn less than planned between 2014-15 and 2018-19, which he said was equivalent to the cost of employing 12,000 nurses over that period.
He said the problem was particularly serious because the NHS was facing “an unprecedented squeeze on its finances”.
The three schemes highlighted by Labour are: accelerated payments, a rule demanding upfront payments in avoidance cases; measures to tackle tax avoidance in partnerships; and debt market integrator schemes, which market the recovery of government debt.
Accelerated payment was originally expected to raise £1.1bn over the five-year period, but is now expected to raise £800m less, according to the OBR.
The partnership schemes are forecast to raise £1.5bn less than the £3.3bn originally expected. And revenue from the debt market integrator schemes is forecast to be £300m less than hoped for over the period.
McDonnell, who has said that tackling tax avoidance would be a Labour priority, suggested that part of the problem was HMRC underfunding. He said the OBR report itself reported that HMRC was blaming “the current level of funding” for the fact that it could not recoup all the money it was hoping for from one of its schemes.
A Treasury spokeswoman said: “All individuals and businesses have a responsibility to pay the tax they owe.
“In this year’s autumn statement, we announced over 30 measures that will tackle avoidance, evasion and aggressive tax planning, which will raise £18 billion over the next five years. This builds on action already taken to secure £130 billion in additional tax revenue through tackling avoidance, evasion and non-compliance since 2010.”
