Budget 08: Avoidance swoop to plug economic gap

Budget 08: Avoidance swoop to plug economic gap

Taxman to save £1.7bn with anti avoidance measures

Alistair Darling made a £1.7bn swoop on tax avoidance schemes in his first
Budget
as he targeted aggressive planning to shore up the hole left by flagging
economic growth.

The chancellor introduced no fewer than 11 anti-avoidance measures that will
hit businesses for more than £600m this year and £1.7bn by 2010. This is more
than double the £780m the Treasury said it would raise from anti-avoidance
measures last year.

With the net changes to business taxation, which will see the corporate tax
rate fall to 28% and capital allowances scrapped, raising an extra £1.4bn for
the Treasury, British business is facing a tax bill £2bn higher than last year.

Experts said some of the anti-avoidance measures were to be expected, but
expressed outrage at legislation clamping down on controlled foreign companies.

The rules announced in the Budget will hit controlled foreign companies with
voting shares held in off-shore trusts and prevent corporates from structuring
CFCs as partnerships. The moves are expected to net £400m for the government by
2010.

‘The CFC crackdown was particularly surprising. The structures that have been
blocked are widely used and the changes are very unhelpful,’ said Bill Dodwell,
head of tax policy at Deloitte.

North Sea oil operators were also hit particularly hard by the avoidance
crackdown. The industry will be paying £490m in extra tax by 2010 after the
chancellor changed rules for the tax treatment of management expenses.

Patrick Stevens, tax partner at Ernst & Young, said anti-avoidance
measures showed that HM Revenue & Customs’ disclosure regime was working
‘very effectively’.
‘The hit count and money raised is higher than before. The disclosure regime is
doing its job.

‘The money raised is a justification for having the regime in place,’ Stevens
said.

Go to our
Budget
08
special report

Share

Subscribe to get your daily business insights

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata
Professional Services

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

3y

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

3y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine
Accounting Firms

Turn Accounts Payable into a value-engine

3y

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
Digital Links: A guide to MTD in 2021
Making Tax Digital

Digital Links: A guide to MTD in 2021

3y

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource