THE CBI HAS LAUNCHED an attack on Government plans for a general anti-avoidance rule (GAAR) in UK tax law - the most significant element in a major attack on corporate and individual avoidance.
Will Morris, head of the CBI tax committee, said it acknowledges the nature of the coalition commitment to consider introducing GAAR and offered whatever help it can to the study team being set up by the Treasury, but disagreed with its purpose.
Morris said: "We believe that this would not be in the interest of the government, taxpayers, or UK competitiveness.
"It would introduce a very unwelcome element of uncertainty to the tax system."
The study was announced with a package of five measures announced in the Commons by Exchequer secretary David Gauke (pictured).
It is part of a coalition commitment agreed between the Liberal Democrats and the Tories and the timing of his written statement to Parliament is seen as a deliberate step to shore up the coalition with the Lib Dems facing a major split in a Commons vote on raising the ceiling on student fees to £9,000.
A Treasury statement said the package "will protect forecast revenues estimated at up to £5bn over the next four years, and are expected to raise over £2bn in additional revenue during the course of this Parliament".
Two measures with immediate effect will: prevent groups of companies using intra-group loans or derivatives, to reduce the group's tax bill, and, address schemes where a company does not fully recognise certain amounts in its accounts involving loans and derivatives.
Three more, to be detailed shortly, will: address the practice of disguised remuneration, stop investment companies retrospectively changing the currency they prepare their accounts in for tax purposes, and, tackle businesses that artificially split the supply of services to reduce VAT.
Gauke said he had appointed Graham Aaronson QC, one of the most experienced and respected tax silks of Pump Court Chambers, to lead a study "to establish whether a GAAR could be framed to meet the objectives of deterring and countering tax avoidance in a fair way, while providing certainty, retaining a tax regime that is attractive to business and minimise compliance costs for businesses and HMRC" and, if so, how it might be framed.
Membership of Aaronson's team would be announced in January with a deadline of 31 October 2011, with its conclusions informing the Budget in 2012, Gauke added.
You may also like
If budgeting is to have any value at all, it needs a radical overhaul. In today's dynamic marketplace, budgeting can no longer serve as a company's only management system; it must integrate with and support dedicated strategy management systems, process improvement systems, and the like. In this paper, Professor Peter Horvath and Dr Ralf Sauter present what's wrong with the current approach to budgeting and how to fix it.
In this white paper CCH provide checklists to help accountants and finance professionals both in practice and in business examine these issues and make plans. Also includes a case study of a large commercial organisation working through the first year of mandatory iXBRL filing.