Fears had grown that a measure would appear in Finance Bill 2000, but a Budget announcement makes it clear that no anti-avoidance strategy will be put in place until the Finance Bill 2001.
Consultation already undertaken had generated concerns that the chancellor would scrap legislation allowing relief on foreign exchange losses in favour of using a new test for deciding whether currency transactions are eligible for tax deductions.
The suggestion was that the test would be the notorious paragraph 13 of the loans relationship scheme which examines whether transactions are for an ‘unallowable purpose’. The test, widely believed to be badly drafted, was thought to threaten millions of pounds worth of tax relief.
But press releases issued today, though confirming an anti-avoidance solution was being sought, insists it will be a ‘targeted measure’, pointing to something more sophisiticated than paragraph 13.
Roger Muray, international tax partner at Ernst & Young said: ‘This is good news. The Revenue has listened to reason and will allow representations.’