Calls for greater scrutiny into Topshop billionaire owner come after Nick Clegg pledges to crack down on tax avoidance

This article is more than 10 years old

This article is more than 10 years old

Liberal Democrat MPs have called for the tax affairs of the government's efficiency advisor Philip Green to be investigated after Nick Clegg pledged to crack down on tax avoidance.

The appointment of the Topshop billionaire last week to head a review of the government's drive to cut public spending was controversial with tax experts and trade unions, who accuse him of avoiding a personal tax bill of nearly £300m.

Green dismissed the criticism as irrelevant, but his role has come under scrutiny again after Clegg said yesterday that clamping down on tax avoidance was on the coalition government's agenda.

Speaking at an event to promote the government's efforts to increase social mobility, the deputy prime minister said: "We are looking at the case for an anti-avoidance rule to ensure that wealthy individuals pay their fair share of tax."

Clegg's comments prompted Liberal Democrat MPs to demand that Green's tax affairs be investigated.

Roger Williams, Lib Dem MP for Brecon and Radnorshire, said that while Green was "very capable", the reports of his tax arrangements should be "looked at" by HMRC and the Treasury.

"We are very keen that artificial arrangements are minimised," he told the Guardian today. "What it brings home to me and my constituents is that rich people can arrange their financial affairs with a great deal more latitude [than poorer people]."

Mike Hancock, Lib Dem MP for Portsmouth South told the Financial Times he had "great concerns" about Green's appointment.

"I'm all in favour of anyone who avoids tax to be tackled firmly and I'm surprised that Clegg would want to appoint someone like that to advise him," he said.

Fair taxes that included "closing loopholes that unfairly benefit the wealthy" was one of the Lib Dems' four key pledges in its election manifesto, and was a policy that Clegg referred to on numerous occasions during the leadership debates.

The coalition agreement promised "detailed development" of the Liberal Democrats' proposals on tax avoidance but the coalition has been criticised by trade unions who accuse it of focusing its energies on slashing the benefits bill rather than cracking down on wealthy tax avoiders.

Green, known for partying with model Kate Moss and X Factor svengali Simon Cowell, as well as his business acumen, banked the biggest pay cheque in corporate history in 2005 when his Arcadia fashion business, which owns Topshop, paid a £1.2bn dividend. The record-breaking payment was paid to his wife, Tina, who lives in Monaco and is the direct owner of Arcadia. As a result, no UK income tax was due.

Last week, Green described questions about his suitability for the post, based on his tax arrangements, as "outrageous". He said he paid "tens and tens of millions of pounds of tax".

Tax Research UK estimates that some £25bn is lost to the exchequer each year as a result of avoidance and planning, including £13bn attributed to individuals.