David Gauke, Exchequer Secretary to the Treasury, has today announced a number of changes to legislation to tackle tax avoidance. Some of these changes will take immediate effect.
Together, these announcements will protect forecast revenues estimated at up to £5billion over the next 4 years, and are expected to raise over £2billion in additional revenue during the course of this parliament.
These measures take the necessary steps to protect the Exchequer, and maintain fairness for the taxpayer, whilst providing certainty for businesses whose investment will encourage the re-balancing of the economy and job creation.
Two measures with immediate effect will tackle tax avoidance by:
- preventing groups of companies using intra-group loans or derivatives, to reduce the group’s tax bill
- addressing schemes where a company does not fully recognise certain amounts in its accounts involving loans and derivatives
Three measures with further detail to be set out shortly, will tackle tax avoidance through:
- addressing the practice of disguised remuneration
- stopping investment companies retrospectively changing the currency they prepare their accounts in for tax purposes
- tackling businesses who artificially split the supply of services to reduce VAT
In addition to these measures, the Exchequer Secretary has asked Graham Aaronson QC to lead a study into a General Anti Avoidance Rule (GAAR). This study will consider whether a GAAR could deter and counter tax avoidance, whilst providing certainty, retaining a tax regime that is attractive to businesses, and minimising costs for businesses and HMRC. The government is committed to predictability and stability for the UK tax system, and would not introduce a GAAR without further formal public consultation.
As set out in the June Budget, the government is committed to tackling tax avoidance, and has been clear that it will build in sustainable defences to address long-standing avoidance risks.
The government’s response to significant avoidance risks will be balanced with its commitment to improving predictability and stability in the tax system. The government will publish on 9 December a draft Protocol that will set out the circumstances in which it will consider changing legislation with immediate effect.
Notes for editors
Written ministerial statement on anti-avoidance.
Further details on the individual measures can be found on HMRC’s website (opens in new browser window).
The measures announced today are expected to raise £2billion over the course of the Parliament in additional revenue. They will also prtect forecast revenues estimated at up to £5billion over the next 4 years. These are current estimates of the impact of these measures. Full details on the costing of these measures will be certified by the OBR at at Budget 2011.
HMRC has today published a document in response to the consultation on bringing inheritance tax on transfers of property into trust within the tax avoidance disclosure regime (DOTAS). The necessary regulations, taking into account those changes will come into effect on 6th April.
The study into a GAAR led by Graham Aaronson QC, will complete its work by 31 October 2011, and inform Ministers of its conclusions. The terms of reference will be published on HMRC’s website (opens in new browser window).
The Spending Review invested £900million over the next 4 years to transform HMRC’s work against avoidance, evasion and criminal attack to bring in extra tax revenue of £7billion a year by 2014/15.
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