Promises to clamp down on tax avoidance are expected to feature in Wednesday’s budget statement following the latest leak of data from an offshore finance centre.
The chancellor may also extend rules clamping down on avoidance by ‘off-payroll’ workers.
Paul Falvey, tax partner at accountancy and business advisory firm BDO, said that in the last budget the chancellor announced rules requiring the public sector to deduct income tax and national insurance from payments to contractors.
‘We now expect the rules to be extended to cover private sector organisations as an anti-avoidance measure,’ he said. This would correct an imbalance in employment tax legislation and avoid a brain-drain from the public sector, he added.
The political row over the so-called ‘Paradise papers’ disclosures heated up last week when Dame Margaret Hodge MP, former chair of the public accounts committee, claimed in parliament that the law firm at the centre of the storm had ignored repeated criticism from regulatory bodies and failed to change its procedures.
Hodge claimed the Paradise papers reveal that UK regulators had talked of ‘persistent failures and deficiencies’ at the firm, Appleby, and that it had been criticised 12 times in 10 years.
She said the reports also talked of a ‘highly significant weakness in the adequacy of the organisation’s controls’. Appleby denies any wrongdoing.