The head of an influential business group has called on the government to clarify which are legal and illegal tax avoidance activities.

Chairman of the FTSE 100 group of finance directors Jonathan Symonds argued that fiscal reforms made over the last five years have damaged the UK's global competitiveness.

"If we have much greater certainty of executing a strategy in the UK because the tax implications are known, it will come right back to UK competitiveness because we will invest more in the UK, particularly as compared to other markets where we do not have it," he said.

Business and government are to come together over the next few months to establish better definitions in the area of taxation.

Meanwhile. the Times reports that the Inland Revenue has given itself new powers to charge an effective 50 per cent rate for those with extra income from buy-to-let, other investments or freelance work.