Budget 2010 Tackling Tax Avoidance
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Press Notice
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Tackling tax avoidance
As set out in the Coalition Agreement, the Government is
committed to making every effort to tackle tax avoidance. The Government will
take a more strategic approach to the risk of avoidance to prevent increasing
complexity and reduce the need for frequent legislative change. In this context,
the Government is tackling long-standing avoidance risks in a way that makes it
clear what result the legislation intends to achieve. The Government will
continue to shut down avoidance schemes as they emerge.
Accounting derecognition
The Government today announces, with immediate effect, an
extension to the rules dealing with "derecognition" of loan relationships and
derivative contracts. These schemes involve profits arising to a company from a
financial asset falling out of account for tax from the "derecognition" of a
loan or derivative. The Government will also shortly publish a Technical Note
setting out proposals to provide a more generic rule to counter avoidance
schemes involving "derecognition".
Avoidance involving Authorised Investment Funds
The Government today announces, with immediate effect, an
anti-avoidance measure to prevent corporate investors using Authorised
Investment Funds for avoidance schemes designed to create a credit for UK tax
where no UK tax has been paid.
A General Anti-Avoidance Rule
As part of an approach to develop sustainable responses to
avoidance risk, the Government intends to examine whether the option of a
General Anti-Avoidance Rule should form one element of strengthened defences.
This will be part of wider work on improvements to the tax policy-making
process.
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The Disclosure of Tax Avoidance Schemes regime
The Government will consult over the summer on bringing
inheritance tax on trusts within the Disclosure of Tax Avoidance Schemes regime.
Stamp duty land tax
The Government today announces that it will examine whether
further changes to the rules on stamp duty land tax on high value property
transactions are needed to prevent avoidance in this area.
Use of trusts to reward employees
The March 2010 Budget announced action to tackle arrangements
using trusts and other vehicles to reward employees which seek to avoid, defer
or reduce liabilities of employees and directors to income tax and National
Insurance Contributions or to avoid restrictions on pensions tax relief. The
Government confirms that Employer Financed Retirement Benefit Schemes are within
the scope of this measure. Legislation will take effect from April 2011.
Life insurance companies
The Government today confirms that
,
as announced at the March 2010 Budget
with immediate effect, the
anti-avoidance rule preventing the manipulation of previously unrecognised
profits to avoid tax will also have effect where life insurance business is
transferred to another company.
Consortium relief
As announced at the March 2010 Budget the Government will
introduce an anti-avoidance measure to counter the manipulation of the
consortium relief rules. This measure will take effect from the date of the
publication of draft legislation. This prevents consortium members accessing
relief for a greater share of consortium losses than their actual involvement
should entitle them to.
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