TaxPersonal TaxBrown clamps down on super rich tax deals

Brown clamps down on super rich tax deals

Chancellor Gordon Brown has launched a crackdown on the tiny handful of mega-rich UK-domiciled individuals benefiting from special agreements with the Inland Revenue.

Link: Anger as rich get away with it

Under the deals the super-rich have been able to agree a cash payment to the IR without disclosing world-wide sources of income and capital gains and the sources of amounts remitted to the UK.

Tax on the remainder was considered not a matter for UK tax authorities, much of which is hidden in tax havens and not taxed at all.

Paymaster general Dawn Primarolo has already announced to MPs that there will be no new agreements added to the 16 or so known to exist – some covering several individuals.

But it is now understood that all existing deals are coming under scrutiny to ensure they represent a fair return to the Revenue on these individuals’ income received in the UK and, where appropriate, they are being brought to an end.

An IR spokesman said: ‘On agreements still in existence, there is taxpayer confidentiality, but as a general point we will be looking at existing agreements in relation to the ruling made in the (Mohamed) Al Fayed case.

‘We won’t be making any more.’

Some of the agreements are already understood to have run their course. Some involve individuals who have moved abroad. It is understood there is no question of these being renewed.

The existence of the arrangements – which Primarolo defended – came to light following the court tussle between Harrods’ boss Mohamed Al Fayed and former Tory MP Neil Hamilton.

Primarolo, in a formal written reply to a question from Labour MP Gordon Prentice, denied the agreements absolved individuals from the general obligation to submit annual tax returns.

She explained that under the Revenue’s power of care and management, agreements were entered into as a practical basis for taxing future income and gains ‘where there would otherwise have been particular difficulties establishing an exact figure’.

She said there was no central record of these agreements. Seven deals were struck in 1997, 4 in 1998, 3 in 1999 and 2 in 2000.

This is the other side of a pincer movement under Brown’s direction, which involves the UK and OECD authorities leaning on offshore havens to require greater openness and accountability, ostensibly to prevent money-laundering by drug barons and terrorists.

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