Labour MP targets tax-dodging firms

The Commons will on Friday see its second reading of backbencher Mr Meacher's Bill outlining a general anti-avoidance principle - a first in British tax law.

High-profile tax-dodgers such as Barclays, Vodafone and Goldman Sachs have insisted their use of tax havens is legal, with tax officials forced to pursue years-long court cases in order to rule specific structures illegitimate.

But Mr Meacher's Bill simply decrees "that any financial arrangements made by a company or individual should not have as their primary purpose the avoidance of tax."

The Oldham West MP said it was clear the Treasury desperately needed the money, with the tax gap estimated at between £25 billion and £120bn.

"Tax avoidance is a curse on the UK economy costing us at least £25 billion a year.

"More importantly, it's money the people of the UK need to be paid so that cuts to essential public services can be avoided."

George Osborne's own "general anti-abuse rule" will close its public consultation on the same day.

But Mr Meacher dismissed the Chancellor's Bill as "weak," saying it did not extend to VAT or National Insurance - the crux of the decade-old Goldman Sachs affair.

"We need a real anti-tax avoidance measure that will stop this abuse for good.

"That's what my Bill is," he said.

Chartered accountant and campaigner Richard Murphy, who wrote the Bill, said he had designed it as broad enough to allow HM Revenue and Customs to challenge indiscrepancies while protecting tax arrangements encouraged by Parliament, such as Isa funds.

Meanwhile taxpayers could always approach HMRC for approval first, he said.

Civil Service union PCS's general secretary Mark Serwotka hailed the move.

"If this bill became law it would give our members who work for HM Revenue and Customs the tools they need to properly tackle the tax dodgers," he said.

"But the government must back this up with an immediate halt to its seriously damaging plans to cut a further 10,000 jobs from HMRC in the coming years."