Our tour guides for the evening: ActionAid's Tom Barns and Natasha Adams
Our tour guides for the evening: ActionAid's Tom Barns and Natasha Adams

Traipsing around the streets of London on a cold Tuesday evening in the middle of February talking about the complex workings of tax avoidance might seem a rather odd thing to do. And well it probably is.

But whether it's legal tax minimising measures, like those of the company that David Cameron’s wife works for, or the revelations leaked this week of widespread and systemic tax evasion by some clients of HSBC's Swiss subsidiary, tax is big news at the moment.

Tax evasion and avoidance has left a huge hole in the public coffers, not only in Britain but in developing countries across the world too.

So here I am, on that aforementioned cold Tuesday night in February, embarking on a tax avoidance tour with activists from ActionAid to find the answer to the all-important question: how do big businesses get away with paying less tax than the rest of us and what can we do about it?

What's the situation?

In a 2013 study, ActionAid found that 98 of the FTSE 100 companies - the 100 most valuable companies listed on London's stock exchange - regularly use tax havens.

As we wander through the backstreets of Mayfair - one of London's most upmarket neighbourhoods - our guides, Natasha and Tom, point out a consultancy firm that boasts of offering its clients "structured wealth solutions". Expensive lawyers and accountants like these find legal loopholes for their clients to save them millions, if not billions, of pounds through the use of tax havens.

A lack of transparency in those havens means it can be hard to calculate exactly how much money is being lost but in Britain, for instance, HMRC figures show that the estimated "tax gap" - the difference between what is due in tax and what is actually paid - is 6.8 per cent of the total due, or about £34bn for the latest year with available data.

But developing countries are losing out too

Edward Musosa, a Zambian activist visiting ActionAid (Picture: Evan Bartlett/i100)

Companies listed on the FTSE 100 in London operate businesses in countries all across the globe. If they avoid paying tax in those countries, the revenue services are losing out on vital income that can help to alleviate poverty and pay for vital public services - like roads that the same companies use to transport their goods and schools in which their future employees are educated.

ActionAid estimates that “developing countries lose three times more to tax havens than they receive in aid each year”.

While dodging pedestrians along Piccadilly, Edward Musosa, an activist from the University of Zambia who is visiting ActionAid, told me that pushing for reform in the country is difficult.

The companies hold a lot of power - increase taxes and they say the cost of production is too high. If they close down then it means a loss of jobs and revenue for the country.

  • Edward Musosa
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