GEORGE OSBORNE was warned over three years ago that a tax loophole exploited by chocolate giant Cadbury could cost taxpayers dearly, Labour revealed yesterday.

The Chancellor ignored advice from HM Revenue and Customs (HMRC) in October 2012 to close the bond scheme that is now at the centre of a corporation tax scandal. The ploy, which remains legal, involves using a bond registered in the Channel Islands to claim back interest payments.

It helped Mondelez, the parent company of Cadbury, to avoid paying any corporation tax in Britain last year, despite making £96.5 million from confectionary sales here. Labour pledged during the general election campaign that it would scrap the scheme. 

Writing to Mr Osborne yesterday, shadow chief Treasury secretary Seema Malhotra demanded to know why the advice of the government’s own tax experts had been ignored. 

“Public concern has rightly been growing at the ability of large companies to duck the obligations the rest of us are held to in paying our taxes, with Mondelez the latest in a long line of companies shirking their responsibilities,” she wrote.

Ms Malhotra also called on the government to review plans to close 137 tax offices across Britain in light of the scandal. 

She warned: “The closure of tax offices and the loss of experienced staff will simply make life very much easier for those corporations seeking to avoid paying fair taxes.”