In the run up to the general election the Labour Party have made it clear that they intend to build on and extend HMRC’s current efforts to crack down on tax avoidance schemes. They have announced plans to introduce penalties of up to 100% of the tax avoided through the use of what they consider “aggressive schemes”. Shadow Chancellor Ed Balls said that while his party supported the General Anti-Abuse Rule (GAAR), it was ‘currently a GAAR without teeth’ and pledged Labour’s commitment to a tougher regime. ‘Those who are caught have to repay the tax they tried to avoid, but they do not face a penalty. There is still no disincentive to try and game the system. That is why Labour will bring in a tough penalty regime for the GAAR, with fines of up to 100% of the value of the tax which was avoided,’ The Shadow Chancellor has set out a number of areas where he would take action including closing down what he described as ‘the Eurobonds loophole’, addressing umbrella companies and false self-employment and stopping avoidance by hedge funds. Whilst some of these areas can be seen as very much as on the fringes for most companies, the reference to umbrella companies and false self-employment will be of particular concern to the recruitment and construction sectors. HMRC will also be seeking to build on their success in recovering 23 billion pounds from previously undisclosed offshore accounts with some 56,000 disclosures reported to have been made in initiatives like the Lichtenstein Disclosure Facility.