Budget 2011: Osborne's tax avoidance 'crackdown' will have the opposite effect, says leading campaigner

Chancellor George Osborne has been accused of providing a "boost" for the UK's tax avoidance industry despite announcing a crackdown on the practice that would raise tax receipts by £1bn. Richard Murphy, a director at Tax Research UK, said: "Will this budget help beat tax avoidance? No, it won't. It's the biggest boost in the arm for the tax abuse industry that it's had in a long time. Osborne knows who his friends are. I can't remember a chancellor who didn't say in a budget that he was going to raise £1bn by tackling tax avoidance. A billion pounds is the average raise. These are token gestures. If he was really serious, he would give HM Revenue & Customs a couple of billion a year to tackle this. I reckon they could raise £20bn. I am completely underwhelmed." Murphy fears that "tax planning opportunities" will have increased almost "endlessly" because of changes in the budget such as the taxation of money being brought onshore by non-doms and tax cuts for businesses' foreign operations. In the 2009 budget, the then chancellor, Alistair Darling, announced his own crackdown on tax avoidance. At the time he said: "We have identified loopholes and schemes which, when closed, will result in £1bn of extra revenue over the next three years." In the run-up to last year's general election, the Liberal Democrats promised to find more than £12bn by cracking down on tax concessions and loopholes. Tax avoidance cost HMRC £14bn in 2008, Osborne said, as he used his budget speech to announce a clampdown on abuses by the better-off. His new measures to bring in higher revenues and close Britain's budget deficit include: plans to close down three forms of stamp duty land tax avoidance, which had seen rich individuals set up their own "financial institutions" to buy luxury homes and avoid stamp duty; reforms to capital gains tax, where a loophole had been exploited by companies that were transferring assets out of a group; and an assault on rarely repaid lifetime loans handed out by companies to their key executives. However, accountants fear that the new rules designed to bring an end to the tax-free loans – which are widely used to avoid taxes on bonuses paid to top City traders as well as Premiership footballers – are so wide-ranging that they may end up creating unintended consequences. Yves Remedios, tax principal at accountants BDO, said: "The disguised remuneration rules have been broadly drafted and should be a concern to employees. In simple terms, a loan to an employee could be taxed as earnings when the loan is given but there is no corresponding tax refund when the loan is repaid. While exceptions have been promised, these rules could be a trap for the unwary." He added, however, that Osborne's changes to stamp duty regulations will stop "widespread avoidance on residential property acquisitions … as this arrangement formed the basis of most of the schemes being marketed by specialist tax boutiques and law firms". The chancellor told the Commons that his latest measures would "raise £1bn and £4bn over the parliament" in what he billed as the harshest attack "on tax avoidance in any budget in recent years". The latest £1bn figure follows Osborne's announcement in December that he would boost tax receipts by £2bn over the next four years. He now believes tougher enforcement by HMRC and additional measures will double that figure. Tax experts say there are many areas in which HMRC could claw back duties. In a report published this month, Tax Research UK stated that the country is missing out on £16bn in taxes because little is known about more than 500,000 companies that were dissolved in the year to March 2010, which often "disappeared forever".