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Labour promise ‘crack down’ on tax evasion

Shadow chancellor Ed Balls has accused the Conservatives of ‘turning a blind eye’ to illegal tax planning and promised that a Labour government would introduce measures to tackle what he called ‘systematic tax evasion’.

In an interview on the BBC’s Andrew Marr show, Mr Balls said: ‘We are the party who will crack down on tax planning and on systemic practices, where people are trying to avoid paying the tax Parliament intends… Conservatives from the Treasury and Number 10 turned a blind eye to what was happening at HSBC and that is what makes people angry.’

Mr Balls acknowledged that certain schemes to reduce tax payments, such as entrepreneurs’ tax relief or ISAs were legitimate, but said that ‘if people are actually setting up false structures to avoid paying their tax or going off to live in Switzerland in order to avoid paying their fair share in tax, we will crack down.’

However, Mr Balls has been attacked by the Conservatives over comments he made in the same interview implying that people should always get a written receipt for all transactions, even if it is a small gardening job such as cutting a hedge for £10. He claimed that he always asked for a written record, because it was the ‘right thing to do’.

Work and Pensions Secretary Iain Duncan Smith said this was ‘absurd’ and showed that Labour had a ‘complete lack of understanding of how business works and how people get by’.

Tax avoidance and evasion have been hot political topics over the last week, following the allegations about HSBC’s activities.

On Saturday, Ed Miliband promised a "root-and-branch" review of HMRC should Labour win the May election.

Meanwhile, Chief Secretary to the Treasury Danny Alexander has said that he is consulting with HMRC on whether it needs extra legal powers or whether new laws need to be introduced regarding tax evasion. He told the BBC’s Sunday Politics show: ‘If they come back and say we need extra powers or resources... I'll make sure they have what they need.’