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Naming and shaming of tax avoiders is long overdue

Widespread anger at millionaires who fail to pay the required portion of their income in tax and multinational companies which use complex networks of overseas subsidiaries to keep billions of pounds out of reach of the revenue authorities has so far resulted in little effective action being taken against such scams.

The problem is that they are not illegal: examples of tax avoidance rather than tax evasion. Closing the loopholes therefore requires changing the regulations. Naming and shaming those who fail to pay their dues and go to considerable trouble and expense to reduce their bills is therefore the fastest and most efficient weapon available.

In the case of the comedian Jimmy Carr, who sheltered £3.3 million in an offshore scheme, the public opprobrium resulted in an eventual apology. However, thousands of other wealthy individuals use similar legal but highly unethical accounting schemes to reduce their tax liability, sometimes to as little as 1%, costing the country about £5 billion a year.

Margaret Hodge, the robust and tenacious chairwoman of the House of Commons Public Accounts Committee, has taken a positive step towards shining some much-needed light on the morass of complex tax avoidance schemes by calling for HMRC to publicly name and shame those who sell these under-the-radar ways of reducing liability as well as the individuals who use them.

As she points out, the schemes deliberately abuse the law knowing it will take time for HMRC to change the regulations and shut them down. It is a game of cat and mouse in which HMRC and the UK taxpayer are always the losers and the winners are never penalised.

This would be unacceptable at any time but when services are being cut, public outrage ought to force action.

In the case of Starbucks, a consumer boycott resulted in an offer to make a £10m payment. Other global companies including Google and Amazon are more difficult for people to deprive of their custom but finance ministers at the G20 last weekend agreed to carry out a major investigation into global corporate tax avoidance to find a way of bringing about international regulation.

That will be difficult but must be done. Time must also be called on wealthy individuals and their financial magicians in the UK. Those who deliberately cheat the system cannot expect to hide. If they believe their actions are defensible, they must justify why they should not pay their share towards all the elements which make up a civilised society.

When taxpayers who earn a fraction of the dodgers' income pay their share towards the common good, the naming, shaming and penalising of the rich who abnegate their responsibility is long overdue. There is not only a clear moral case for holding them to account. The financial one is also compelling.

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