UK Politics

Clegg and Cameron pledge action on firms' tax avoidance

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Media captionDavid Cameron advocated the need for a "tougher approach" to tax avoidance

Nick Clegg and David Cameron have pledged to do more to stop tax avoidance by big companies.

The deputy PM told the BBC he hoped there would be progress on an "anti-avoidance" tax rule in the Budget.

And the prime minister said a "tougher approach" was needed towards large firms with "fancy corporate lawyers".

He also said the "excessive" health and safety culture was costing businesses billions and he intended to "kill" it off for good.

Last month a Commons committee criticised deals between HM Revenue and Customs and big businesses.

'Unduly cosy'

The public accounts committee said they believed there was £25bn of outstanding tax potentially owed by big companies - but HMRC and the prime minister's spokesman rejected claims of "unduly cosy" relationships.

However, speaking to an audience of small businesses and entrepreneurs in Maidenhead, Mr Cameron said HMRC had to collect in "a fair and business-friendly way".

"With the large companies, that have the fancy corporate lawyers and the rest of it, I think we need a tougher approach.

"One of the things that we are going to be looking at this year is whether there should be a general anti-avoidance power that HMRC can use, particularly with very wealthy individuals and with the bigger companies, to make sure they pay their fair share."

He said the government was doing its bit to cut the rate of corporation tax - and businesses should recognise they "should pay that rate of tax rather than try to avoid it".

Fees cap

The prime minister also told the audience that the "excessive health and safety culture has become an albatross around the neck of British businesses" - costing them billions and leaving entrepreneurs in fear of speculative claims.

"This coalition has a clear new year's resolution: to kill off the health and safety culture for good," he said.

He announced plans for a cap on legal fees for small value personal injury claims against employers to reduce cases funded by "no-win no-fee" deals.

"I don't think there's any one single way you can cut back the health and safety monster," said Mr Cameron.

"The key about health and safety is not just the rules, the laws and regulations - it's also the culture of fear many businesses have about health and safety."

But his comments were criticised by Richard Jones, of the Institution of Occupational Safety and Health.

"Labelling workplace health and safety as a monster is appalling and unhelpful," he said.

"The reason our legislative system exists is to prevent death, injury or illness at work, protecting livelihoods in the process.

"The problem identified by the government's own reviews is not the law, but rather, exaggerated fear of being sued, fed by aggressive marketing."

'Army of accountants'

In a BBC interview, Deputy Prime Minister Nick Clegg also raised the issue of tax avoidance - saying people were "rightly angered" by a "wealthy elite" who paid "an army of accountants" to avoid taxes.

He said he wanted to see a "general anti-avoidance rule" to stop people "abusing" the system and said an expert's report to the Treasury had suggested an anti-abuse rule was feasible.

"I very much hope, and I'm not going to write [Chancellor] George Osborne's budget, we can make progress on that in the budget because we have got to make sure the tax system is fair and is seen to be fair," he said.

But, for Labour, Shadow Treasury Minister Owen Smith said proper enforcement was the answer to tax avoidance.

"Large companies should not get special treatment at the expense of small businesses and individual taxpayers," he said.

"But ministers stood by while Revenue & Customs cut a sweetheart deal with Goldman Sachs and other big corporations.

"They also appear to have failed to ensure that HMRC complied with its own processes, resulting in a substantial amount of money being lost to the Exchequer.

"It's time ministers took responsibility and acted to tackle the tax avoidance happening on their watch."

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