Primarolo attack over tax ‘avoidance’ schemes.

The government has issued its stiffest warning yet against artificial forms of tax avoidance.

Paymaster general Dawn Primarolo has won unprecedented Tory backing for outlawing rent factoring designed to secure excessive tax relief and announced swift counter-action if any similar schemes emerge.

And she warned those engaged in ‘a game of cat-and-mouse’ between tax planners and the Inland Revenue that the government would stop the abuse.

She told MPs on the Finance Bill committee: ‘This is the warning: we will not hesitate to act against any equivalent schemes that are designed to obtain a tax deduction that is not justified by the true substance of the transaction.’

And shadow finance minister Oliver Letwin said: ‘The government is absolutely right and it is astonishing this action has not been taken before.’

He said the opposition would support similar action against analogous activities – particularly against distortions involved in leasing schemes – and a future Conservative government would do the same.

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