The Confederation of British Industry (CBI) has backed new powers for the Government to stamp out aggressive corporate tax avoidance schemes, which the organisation admits seriously damage the reputation of UK industry.
The dramatic u-turn comes after a Treasury-commissioned report published by Graham Aaronson QC last November which recommended a 'General Anti-avoidance Rule' (GAAR) to replace the existing plethora of UK tax regulations.
The CBI at first warned that a sweeping new anti-avoidance rule risked creating harmful uncertainty for firms.
But now the business body has thrown its weight behind the GAAR. "We don't think business is done any favours by these highly abusive [tax avoidance] schemes which essentially tar all of us," said William Morris, chairman of the CBI's tax committee.
"If we can come up with a GAAR which walls those things off and makes it clear that, whatever the words of the legislation are, HM Revenue & Customs can prevent them from happening, then we're all going to be better off. If that's the case, yes, we're for it."
However Richard Murphy, of the campaign group Tax Justice Network, said that the CBI was backing GAAR because the new rule would be ineffectual.
"The GAAR would only tackle the very periphery of abuse," he said. "It would leave the vast majority of tax avoidance by multinationals completely untouched."