MPs back tax avoidance provisions

Tax avoidance provisions in the finance bill are ‘proportionate,’ a
parliamentary committee has concluded.

The House of Lords released a report on the 2005 finance bill this week, and
in a surprise move offered support to Revenue & Customs in its battle with
tax advisors over tax avoidance.

Advisors had appeared before the committee to express concerns about the
scope of the Revenue’s attack on tax avoidance, especially relating to unclear
distinctions between abusive and acceptable tax avoidance.

But, talking about VAT disclosure measures, the Lords committee said that the
measures were ‘proportionate and appropriately targeted’.

Advisers had expressed doubts that the rules were too broadly drawn and could
catch other transactions. The Lords accepted HMRC’s defence of the broadness of
the proposals, which is to be combined with more specific guidance notes.

The Lords committee also argued that ‘a convincing case’ had been made for
retro-active legislation on city bonus avoidance.

The pre-budget report last year included provisions to rule out such
avoidance from the date of the report, breaking new ground in tax law and
prompting some to say that the Revenue had introduced a general avoidance rule
(GAR) by the back door.

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