TaxCorporate TaxDoor slammed on tax avoidance loopholes

Door slammed on tax avoidance loopholes

Corporation and inheritance tax avoidance loopholes have been slammed shut today by paymaster general, Dawn Primarolo.

Link: KPMG wants debate on tax avoidance

Both loopholes were listed in the annexes of the Finance Bill. The corporation tax clampdown targets companies that get tax relief on intangible assets such as patents and trademarks.

‘There is evidence that companies are entering into schemes that seek to bring other assets (those already in existence on 31 March 2002) into the new regime, to enable them to receive the 4% relief per year,’ reads a government press release.

‘If successful, this would allow companies to transfer assets within a group (without capital gains consequences) but the same parties would still be unrelated for intangibles purposes – so the transaction would bring the assets into the intangibles regime. These schemes are intended to enable a company to continue to receive tax relief for a period of 25 years.’

The inheritance changes aim to close a loophole where gift donors would make a lifetime gift in order to reduce the value of their taxable estate.

More detailed information can be found at here.

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