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Rachel Reeves will vow to “take on the tax dodgers” on Tuesday as Labour announces its plan to raise over £5 billion a year to fund the NHS and breakfast clubs.
On a visit to a hospital in Manchester with shadow health secretary Wes Streeting, the shadow chancellor will announce a new target to raise £5.1 billion per year by the end of the next parliament.
The official “tax gap” — the difference between the amount of tax that should, in theory, be paid to HMRC, and what was actually paid — stood at 4.8 per cent of all tax liabilities in 2021-22, equivalent to £35.8 billion.
The House of Commons public accounts committee has raised concerns over HMRC’s performance in collecting revenues, suggesting “the government is missing the opportunity to recover billions in lost revenue by not resourcing compliance.”
In a newly released plan, Labour said the government has “lost any focus and energy” in tackling tax compliance and avoidance.
Taking aim at the “tax gap”, the party has pledged up to £555 million of additional funding to HMRC as part of a new crackdown.
It comes after chancellor Jeremy Hunt axed the UK’s tax breaks for non-doms at the spring budget last month — a measure previously touted by Labour as its flagship revenue-raiser for the NHS and school breakfast clubs.
The chancellor’s decision to scrap the non-dom tax status, which lets foreign nationals living in Britain avoid paying tax on overseas earnings, had left Labour without its main source of cash for the health service and breakfast clubs.
Labour’s latest plan is to bolster the number of compliance officers working in HMRC by up to 5,000 — as part of a bid to increase investigations, tackle fraud and ensure tax owed is collected.
The party has also declared it will invest in the “modernisation” of the tax office to improve compliance rates and customer services, while freeing up resources to focus on more complex cases.
Speaking ahead of the announcement on Tuesday, Rachel Reeves declared that “if you make your home and do your business in Britain, then you should pay your taxes here too.”
The shadow chancellor said: “At a time when working people in Britain are being asked to pay more in tax because of the Conservatives’ economic failures, it is wrong that a minority continue to avoid paying what they owe.
“After fourteen years in power, the Conservatives have failed to tackle this issue and the tax gap remains unacceptable high. With Labour, things will change. We will take on the tax dodgers because if you make your home and do your business in Britain, then you should pay your taxes here too.
“The plan we are announcing today will give HMRC the resource it needs to go after those who are avoiding or evading tax, and to modernise the tax office so we have a system that is fit for purpose.”
Commenting on Labour’s commitments to the NHS and breakfast clubs and questions over funding, Reeves added: “I have been clear that everything in our manifesto will be fully costed and fully funded. There will be no exceptions. That is why last month I promised to go through all the government documents in an orderly way to identify the funding streams to honour our commitments to the NHS and schools.
“That process is now complete and the funding a future Labour government will raise from taking on the tax dodgers will fund more appointments in NHS hospitals, new scanners, extra dentist appointments and free breakfast clubs for all primary school pupils.
“Our schools and our hospitals are the British people’s priorities – and they are Labour’s priorities too.”
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