While UK governments talk tough on tightening public finances, their actions tell a different story. In an era of crumbling infrastructure, spiralling inequality, and unprecedented pressure on public services, it is not the wealthiest who are shouldering the burden—but ordinary citizens.
From austerity to stealth taxes, successive governments have steadily shifted the financial weight onto households. Winter fuel payments, child benefits, and other social supports have been stripped back. Tax hikes target workers and consumers, while the largest multinational corporations are treated with striking leniency.
The result? A slow-motion crisis of public confidence—and a missed opportunity to restore economic resilience.
Profit Shifting and Public Theft
Each year, an estimated US$1.42 trillion in corporate profits is shifted into low- and no-tax jurisdictions. This erodes public revenues by US$348 billion annually, draining the very lifeblood of national economies. Much of this tax abuse is funnelled through UK-based financial networks, including its Crown Dependencies and Overseas Territories.
HMRC’s response has been tepid. It admits to having little knowledge of the true extent of corporate profit shifting and has made no prosecutions under the Criminal Finances Act 2017—despite having the legal powers to do so. Instead, it cuts ‘sweetheart deals’ with corporate giants, protected by secrecy clauses that even Parliament cannot pierce.
How It Works: A Banana Republic in All but Name
The mechanics of corporate tax avoidance are staggering in their audacity. Take bananas: a product costing 13p at the point of origin is marked up through internal transactions in places like the Caymans, Luxembourg, and Jersey—jurisdictions with negligible tax rates. By the time the banana arrives in a UK supermarket and sells for £1, only 2p of profit is taxed in Britain. The other 47p in profit? Disappears offshore, beyond the reach of UK tax authorities.
Or consider BHS. Before its collapse, the retailer funnelled £153 million in rental payments to a Jersey-based company owned by the wife of its CEO. The profits were never taxed in the UK and ended up as dividends in Monaco—a tax haven with zero income tax.
This is not a bug in the system. It is the system.
The Cost of Corporate Indulgence
The consequences are profound. Between 2010 and 2024, HMRC estimates it failed to collect £500 billion in taxes. Independent estimates suggest the real figure could be nearer £1.4 trillion. This is money that could have funded our NHS, repaired our schools, invested in green infrastructure, or protected the most vulnerable.
Instead, we are left with failing public services, stagnant wages, and a growing undercurrent of disillusionment with our democracy.
A Broken Social Contract
The government’s refusal to implement Public Country-by-Country Reporting, despite having passed legislation in 2015, speaks volumes. The law was quietly repealed in 2023—just as other countries, like Australia and EU members, pushed ahead with transparency reforms.
Worse still, the UK, along with the US, voted against the UN Framework Convention on International Tax Cooperation, choosing to protect corporate secrecy rather than support a fairer global tax system.
This is not a question of administrative failure—it is a matter of political will. Our government is no longer neutral; it is complicit.
Rebalancing the Scales
If the UK is serious about investing in its defence, its health system, and its infrastructure, it cannot afford to ignore the black hole of corporate tax abuse. Rebalancing the scales means:
- Enforcing laws that already exist, including the Criminal Finances Act
- Reinstating and implementing public reporting of profits, taxes, and employees by country
- Taxing dividends and interest at source when flowing to low- and no-tax jurisdictions
- Ending opaque HMRC deals and bringing them under parliamentary oversight
- Supporting international efforts—like the UN tax convention—to create a level global playing field
The public cannot carry the weight of austerity forever. Tax justice is not just an economic necessity—it is a moral imperative.
The longer we fail to act, the more we erode the very foundations of democracy.
Academy of Life Planning 