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.