VAT loopholes on digital sales cost UK more than £1.6bn annually

Tax loopholes on digital the sales of digital services will cost the UK government more than Olympics between 2008 and 2014, a new research has revealed.

Intensifying pressure on George Osborne to close VAT loopholes in his autumn statement, researcher at Greenwich Consulting estimated that the UK government is losing more than £1.6bn (_2bn) per year in VAT on digital services purchased by British consumers from multinational companies, like Amazon, which are headquartered overseas.

Between 2008 and 2014, the government will lose an estimated of £10 billion, more than the London Games that cost the government £9 billion.

When asked what the government was doing to tackle with tax avoidance, David Cameron's office said, "The issue for government is how we tackle that tax avoidance . What we have to do in government is make sure we are tackling that kind of aggressive tax avoidance."

The Prime Minister's office added that they were taking a number of steps to tackle the problem of tax avoidance, such as introducing a general anti-avoidance rule and seeking cooperation of other countries.

Uncut, an anti-tax avoidance pressure group, warned it would stage protests in Starbucks cafes. The protests, which will be against multinational companies like Starbucks, Google and Amazon, will involve tactics like creative civil disobedience.

Meanwhile, Chancellor George Osborne is widely expected to find more cash in his Wednesday's autumn statement to fund a drive by Her Majesty's Revenue & Customs to raise additional £10 billion in tax revenues.

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