Southwark Council hopes to turn up the heat on tax-dodging corporations after signing up to the Councils for Fair Tax Declaration.
By approving the scheme at the July 13 Council Assembly, it has pledged to “lead by example” by demonstrating good practice in its tax conduct.
This involves numerous commitments including not using offshore vehicles for purchasing land and property.
The council will also ensure service providers aren’t using the guise of ‘not-for-profit’ status to avoid tax and business rates.
Councillor Cryan, Cabinet Member for Finance, Democracy and Digital said: “We are delighted to join other councils across the country in calling for new powers to reward good business practices and challenge those corporations who rip off the taxpayer through avoiding paying their fair share.
“Corporation taxes pay for roads, schools, care homes and new council housing. Public finances have never been under such strain and where businesses refuse to play by the rules this means that councils like Southwark lose out. It is our duty to stand up to for residents and all taxpayers by ensuring we do our bit to encourage the best possible practices by businesses across the country.”
Southwark Council part of a group of 23 UK authorities signed up to the declaration which includes Lambeth and Greenwich councils.
By doing so, it has also promised to ensure IR35 is properly implemented so that contract workers pay the correct tax.
In September 2021 HM Revenue and Customs announced the tax gap – the difference between the exchequer’s expected income and actual receipts – was £35 billion in the 2019 to 2020 financial year.
Freedom of information requests have previously revealed that UK residents have £850 billion in overseas accounts, £570 billion of which is in tax havens.
For context, it is estimated that furloughing 11.7 million jobs during the pandemic cost the government £70 billion.
Mary Patel, Networks Manager at the Fair Tax Foundation said: “We’re delighted that Southwark Council is standing up for responsible tax conduct by approving the Councils for Fair Tax Declaration.
“As recipients of significant public funding, it is right that local councils should take the lead in the promotion of responsible tax conduct; be that by asking contractors to be transparent about their profits and who owns them, or by refusing to go along with offshore tax dodging when buying land and property.
“At the Fair Tax Foundation, we believe that ‘good’ tax conduct should be a core public procurement consideration. Not only because it helps level the playing field for competing suppliers and bolsters the national corporate tax take, but it also enables better identification and mitigation of financial and corruption risks by contracting authorities.”