Save content
Have you found this content useful? Use the button above to save it to your profile.
Labour Party Manifesto
The Labour Party
Labour Party Manifesto

Labour's tax policies

by
16th May 2017
Save content
Have you found this content useful? Use the button above to save it to your profile.

Any accountant who has read the Labour Party’s manifesto must surely be seriously considering voting for them.

While the highly publicised attempts to tax the rich might increase personal liabilities to a relatively small degree, they will hit many clients much harder, which is always good for business.

In headline terms, the freezes to NIC and VAT will be generally welcomed, potentially offering better terms than the Tories. On income tax, an extra 5% – 10% on the top slices of income are probably bearable, keeping in mind the top income tax rate of 83% that Harold Wilson’s Government imposed back in the 1970s.

More significantly, Labour’s Tax Transparency and Enforcement Programme promises to be a fantastic source of work as clients find themselves staring down the end of a blunderbuss with no prospect of escape.

Without wishing to repeat every one of the 20+ points that Labour believes will pay for so many desperately needed services going forwards, it is worth highlighting some of the best.

Preferred creditor status for HMRC seems to be eminently sensible. It is actually hard to understand why it was removed in the first place, since allowing the public coffers to get a first look at the assets of insolvent business ahead of other creditors should not be all that controversial.

The clampdown on umbrella agencies might be more questionable but since these are entirely artificial means of saving tax, it is hard to find an intellectual argument as to why they should be permitted to continue.

Similarly, attacking those who incorporate to save tax seems to make sense, although there must be a risk that many “innocent” parties could get inadvertently caught out.

Closing the “Mayfair Tax” loophole might mean as little to readers as it does to this writer but since this appears to be a means by which private equity companies diddle the Exchequer, they would need to put up a good defence as to why the country should not benefit by approximately £0.75bn each year through this change.

In the smaller print at the bottom, there is a proposal for an immediate public enquiry into avoidance, once again an unexceptionable idea. Ditto a specialised Tax Enforcement Unit within HMRC, preventing tax avoiders from getting public contracts (although the definition of an avoider will have to be considered carefully) and beefing up the department more generally, as has been suggested in this column on a regular basis for many years.

This columnist would also have to agree with the introduction of A General Anti-Avoidance Rule, given his public statements about the need for just such a measure over a number of years.

Where these proposals get really controversial is in the demand for public filing of tax returns by large companies and individuals earning more than £1m a year. One would guess that there would be considerable opposition to these measures from well, as it happens, large companies and individuals earning more than £1m a year. It has to be said that others may also regard these measures as unnecessary if some of the other Labour proposals are implemented, cutting out so many loopholes and abuses.

At the moment, it seems highly unlikely that the Labour Party will get anywhere near power and therefore these measures appear to be little more than academic exercises. However, it is not unknown for one political party to steal helpful policies from their opponents and so one or two of these proposals might just come onto the statute books at some point in the not too distant future.

Replies (0)

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.