Reeves declares conflict on tax dodgers to win again billions for public providers

Rachel Reeves will vow to go after the tax dodgers to claw back billions of pounds for public services.

The Chancellor will set her sights on closing the £39.8billion tax gap by pursuing those who are avoiding or evading paying their fair share. Some 200 newly hired experts will be parachuted in from November to grip the problem – with plans to beef up the force by 5,000 over this Parliament.

The crackdown comes as Ms Reeves grapples with the £22billion Tory black hole in the public finances ahead of next month’s Budget. In a speech at Labour Party conference today, Ms Reeves will say: “At a time of hard choices, I will not tolerate the minority who continue to avoid paying what they owe.

“If you make your home and do your business in Britain, then you should pay your taxes here too. Those are my values. They are the Labour Party‘s values. And they are the British people’s values.”

HMRC estimates from 2022/23 reveal a multi-billion pound hole in the Treasury coffers, between the amount of tax that should be collected and the true total.

Wealthy Brits or businesses illegally evading tax, and criminals smuggling alcohol and tobacco into the country made up around a quarter (24%) of the tax gap last year. Other factors include the “hidden economy” (6%), where businesses aren’t registered or workers moonlight in other roles without declaring it.

The largest group is people failing to “take reasonable care” with their taxes (30%), by failing to record transactions or carelessness, or error (15%). Tax avoidance, where wealthy people or companies legally use the system to reduce their bill, such as using offshore tax havens, makes up around 4%.

Ms Reeves will vow to power up HMRC to win back this lost cash, which could be funnelled into public services. She will say: “We will give it the resource it needs to go after those who are avoiding or evading tax, and we will modernise it so we have a system that is fit for purpose.”

The Treasury will also announce a consultation on mandatory e-invoicing, to make it harder for firms to dodge paying tax.

Ahead of the Budget, the Chancellor will underline that “there will be no return to austerity” after Keir Starmer made a vow to Mirror readers at the weekend. She will say: “Conservative austerity was a destructive choice for our public services – and for investment and growth too.

“We must deal with the Tory legacy and that means tough decisions. But we won’t let that dim our ambition for Britain.”

Her comments will ease fears of massive public spending cuts in the Budget, which rose after the Prime Minister warned the public it would be “painful”. Labour is hoping to shake off some of its recent gloom at its annual conference in Liverpool, with a pivot to a more hopeful message to the nation.

In a direct message to Mirror readers, Ms Reeves said “we will make you better off” after 14 years of Tory rule. “You have been let down by successive Tory prime ministers who put party first, country second,” she said.

“In July the country voted for change and I am determined to deliver that change. That starts with a very simple promise to Mirror readers: we will make you better off. We will put more money in your pockets so you don’t have to worry so much about the weekly shop.

“We will cut hospital waiting lists so the NHS is once again there for you when you need it. And we will rebuild Britain by investing in the jobs, industries and businesses of the future.”

Ahead of the Budget, Ms Reeves will vow not to put up taxes on working people – VAT, income tax, and national insurance – and to keep corporation tax at 25% over the next Parliament. “My budget will keep our manifesto commitments. Every choice we make will be within a framework of economic and fiscal stability,” she will say.

The Chancellor is resisting pressure from Labour backers to slap a wealth tax on the richest Brits. Unite, one of Labour’s biggest union supporters, has been calling for a 1% tax on the richest 1% in society, which it said could raise around £25billion a year. It is expected to bring forward a motion to conference on the issue.

Ecotricity founder Dale Vince, who gave millions to Labour in the run up to the election, told the Mirror that he was calling for taxes on wealth. The green businessman said: “I’m backing calls for a wealth tax and a rise in capital gains tax.

“We need both because there are people in this country with a lot of money – who pay less tax as a proportion of their incomes than ordinary workers, that’s not right and Labour should change those rules. Those with the broadest shoulders should pay their fair share.

“It’s time to tax money made with money in the same way we tax money made with a pair of hands. All forms of income should be taxed equally.”