The shadow chancellor said he would crack down on “systemic practices” as he accused the Tories of making a “joke of an excuse” for claiming they knew nothing about the allegations of tax avoidance at HSBC’s Swiss subsidiary. The bank published a full-page letter in British newspapers on Sunday signed by its chief executive, Stuart Gulliver, to offer its “sincerest apologies” for past practices.
Balls indicated, however, that the use of deeds of variations on wills was unlikely to be his main target because parents often make prudent plans for their children in their wills.
His remarks came as the work and pensions secretary, Iain Duncan Smith, said Britain had the cleanest system of party political funding in the world and rejected a call by the former chancellor Kenneth Clarke for the state funding of political parties. There has been intense focus on party donors after the Guardian disclosed that as many as seven Tory donors legally held bank accounts at HSBC’s Swiss subsidiary.
In an interview on the BBC’s Andrew Marr Show, Balls said Miliband had paid all the tax he owed on his parent’s house. A deed of variation on his father’s will after his death in 1994 was made to move ownership of some of the property from his mother to the Miliband brothers. This could have reduced the amount of inheritance tax due on the property. The Daily Telegraph reported in 2010 that Ed Miliband paid capital gains tax after selling his share of the property to his brother David.
Balls said: “I think Ed Miliband paid all the tax which was due. We are the party who will crack down on tax planning, on systemic practices where people are trying to avoid paying the tax parliament intends in order to get round the law. That is wrong and we will act.”
Asked whether he would crack down on the use of deeds of variation, Balls said: “We will look at every area of tax law. I set out a whole series of areas last Wednesday. I will look at every area. The intention of parliament must be delivered.”
Balls said, however, that some tax planning was acceptable. “In the case of an individual savings account – that is there to allow people to pay less tax on savings, or the film tax relief or entrepreneur’s relief. We have ways in which people can sensibly plan for their children and for their death and the inheritance.
“But if people are actually setting up false structures to avoid paying tax or going off to live in Switzerland in [order] to avoid paying their fair share of tax, we will crack down in a way the Tories have completely failed.”
The shadow chancellor said it was ridiculous for the Tories to claim he should have known about the allegations about tax avoidance at HSBC’s Swiss subsidiary during his year as city minister between 2006 and 2007, given that the documents were not presented to HMRC until 2010. The Tories have also said they knew nothing about the allegations even though Dave Hartnett, the former head of HMRC, was open about the documents.
Balls said: “It came to light in May 2010 at the time the government changed. It has been in the public domain for five years. And last week the same Tories who a week ago were alleging I should have known when it wasn’t in the public domain suddenly said, even though it has been in the public domain for five years, they only just found out. It is a joke of an excuse from the Conservative party.”
On party funding, Duncan Smith said : “I have never been a believer in state money. Look at these other countries, France and Germany, where they have state money – they have all sorts of problems. It is not a panacea … Any taxpayer will say: ‘Why should I spend more money on politicians and particularly politicians I don’t even support?’ I agree with them. So the answer is as long as we are open and clear, this system is, by and large, one of the cleanest systems in the western world.”
This article was written by Nicholas Watt, chief political correspondent, for theguardian.com on Sunday 15th February 2015 12.01 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010