TaxPersonal TaxCurrency tax fears remain despite Budget.

Currency tax fears remain despite Budget.

Abuse of foreign exchange rules could mean businesses lose millions.

Fears that changes to the foreign exchange rules proposed by the Inland Revenue could cost UK businesses millions in lost tax relief have not gone away despite Budget day announcements.

Gordon Brown announced that consultation will continue into an anti-avoidance measure, but with no details published experts believe the Revenue could still push ahead with a new test that could hit business hard.

Derek Jenkins, a partner at PricewaterhouseCoopers, said: ‘We are waiting to see what will be in press releases expected this week.’

At a confidential meeting in January with industry representatives, Revenue officials indicated there was a desire to scrap legislation that allows tax relief on foreign exchange losses in favour of using the notorious paragraph 13 test for ‘unallowable purposes’ from the loans relationship rules.

The Revenue believes the old foreign exchange rules are abused for tax avoidance and paragraph 13, widely thought to be badly drafted and untested, is being touted as a proposed solution.

However, a Budget statement spoke of ‘targeted anti-avoidance measures’ leading observers to hope that any new policy will be more refined than paragraph 13.

For more information on this story visit www.accountancyage.com/Tax/1118370.

Related Articles

HMRC urged to clarify impact of income allowances on Self-Assessments

Personal Tax HMRC urged to clarify impact of income allowances on Self-Assessments

4d Alia Shoaib, Reporter
New trading allowance: simplicity, but not as we know it

Administration New trading allowance: simplicity, but not as we know it

1w Emma Rawson, ATT Technical Officer
Wealthy individuals could circumvent top tax rate rises

Personal Tax Wealthy individuals could circumvent top tax rate rises

2m Alia Shoaib, Reporter
HMRC tax evasion assistance requests double in five years

Corporate Tax HMRC tax evasion assistance requests double in five years

3m Emma Smith, Managing Editor
Rangers tax case to have ‘dramatic’ consequences for football and business

Legal Rangers tax case to have ‘dramatic’ consequences for football and business

3m Emma Smith, Managing Editor
Italy grants first successful non-dom status application to former UK non-dom

Personal Tax Italy grants first successful non-dom status application to former UK non-dom

2m Emma Smith, Managing Editor
Industry reaction: Taylor Review does not go far enough in addressing tax issues

Legal Industry reaction: Taylor Review does not go far enough in addressing tax issues

3m Alia Shoaib, Reporter
Does the Taylor Review sufficiently address the gig economy?

Corporate Tax Does the Taylor Review sufficiently address the gig economy?

3m Alia Shoaib, Reporter