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Budget 2010 Tackling Tax Avoidance

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Press Notice 3

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.i

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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Article Published/Sorted/Amended on Scopulus 2010-06-28 14:47:31 in Tax Articles

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