A panel of tax experts are set to advise Labour on a blueprint for boosting compliance and modernising the work of HM Revenue and Customs (HMRC), the party has announced.
Shadow Chancellor Rachel Reeves pledged yesterday Labour would close the £36bn tax gap via cracking down on the non-domicile (non-dom) loophole and improving compliance.
The gap between the amount of tax owed and the amount of tax actually collected by the government amounted to £36bn in 2021-22, the party said, as Reeves confirmed a new target to recoup £5.1bn a year and plans to create a “system fit for purpose”.
Expert independent advisors who will counsel the party on its efforts to rejig tax structures will include Sir Edward Troup, former HMRC permanent secretary and ex-Treasury special adviser on tax; Dame Margaret Hodge MP, former chair of the Public Accounts Committee; and Bill Dodwell, ex-director of the Office for Tax Simplification.
It will also include Mike Bracken, founder and former executive director of the UK Government Digital Service, and be chaired by shadow financial secretary James Murray, with its findings informing Labour’s manifesto and plans for government.
The advisors, Labour said, will offer guidance on compliance and modernisation; legislative changes; enforcement of the rules around tax compliance; the digitisation of the tax system; and provision of customer service, including to vulnerable taxpayers.
Murray thanked the panel, which is expected to meet three times ahead of the general election, and said: “I am looking forward to working with them over the coming months as we prepare Labour’s plans for government if we win the next general election.”
He also told GB News: “The government said they wanted to follow our lead [on non-doms] after years of saying they wouldn’t, but they’re leaving open loopholes in that which means that people can avoid paying hundreds of millions of pounds of tax.
“We want to close those loopholes but that’s part of a broader approach to investment in HMRC to improve compliance.”
Their work will support Labour’s ambitions to grow the economy – but will not touch upon HMRC’s organisational budget; or wider tax policy including rates, thresholds and reliefs.
It comes as tax experts warned Labour still needs to flesh out its plans on closing the non-dom loophole, with some branding their intentions “disappointing”.
Lewin Higgins-Green, from business advisory firm FTI Consulting, said Labour’s suggested reforms “place some original proposals at risk” and “could have an overall negative impact on the UK economy”.
Sophie Dworetzsky, from international law firm Charles Russell Speechlys, added that Labour’s plans to go “even further than Jeremy Hunt are disappointing”.
She said: “These measures feel like trying to squeeze out every last drop until there’s nothing left. The UK operates in an environment of tax competition.”
And Dominic Lawrance, also from Charles Russell Speechlys, urged both parties to “commit to undertaking a genuine consultation process” and stressed: “Any reform needs to be undertaken with real care, so that it does not drive away internationally mobile individuals.”
Nigel Huddleston, financial secretary to the Treasury, said: “Labour hasn’t changed. When it comes to tax – it’s one rule for the British people, another rule for the Labour leadership.”
The Conservative MP added: “The shadow Chancellor is committed to the same old Labour policies – back to square one with higher spending, higher borrowing and higher taxes.
“We have been able to put £900 back in the pockets of the average worker by cutting the double tax on work to help families build a brighter future.”