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Our legal challenge forced HMRC to abandon a sweetheart deal that costs the public purse £420m a year. Now Keir Starmer wants to enforce the law so he can fund child mental health services.
A sweetheart deal that has seen private equity buyout fund managers pay tax at the wrong rate for decades is hanging by a thread, after Labour reiterated its promise to reverse it.
Last year, we teamed up with Dale Vince and forced HMRC to abandon a deal that has seen managers of private equity funds taxed as if they were making investments.
This outrageous deal, struck back in 1987 after the private equity industry lobbied Norman Lamont, the then Tory Chancellor, infuriating civil servants at the Inland Revenue (now HMRC), has cost the Exchequer around £420m a year – enough to pay the salaries of 16,000 nurses.
Our challenge made HMRC concede this “carried interest” policy can now be reversed – and back taxes can be collected – without the need for any legislation. But this will not happen for so long as the Conservatives remain in power.
The Tories are bankrolled by hedge funds and financiers, so there is little prospect of any change whilst they remain in Government – with HMRC under political pressure.
But Labour’s Child Health Action Plan re-commits the party to “abolishing tax loopholes for private equity fund managers”, to help fund desperately needed improvements to child mental health services – if it wins power.
Good Law Project’s Executive Director, Jo Maugham, called this new policy a “very encouraging development”.
“For too long, the private equity buy-out fund industry has benefited from an unlawful and unprincipled tax loophole,” Maugham said. “It’s high time this money was redirected from their bank accounts to where Parliament had always intended it to go – repairing our broken public services”.