An unnamed whistleblower alerted the taxman to an avoidance scheme which
cheats charities out of much-needed funds.
The informant lifted the lid on the scheme, marketed in advance of formal
disclosure to HMRC under the anti-avoidance rules, which could be keeping £200m
out of the UK’s coffers.
HM Revenue & Customs told Accountancy Age the promoters of the
scheme are aiming it at the UK’s highest earners looking to avoid paying tax on
income of £150,000 or more.
The taxman could not be more exact on how much the scheme was worth, because
it is currently unknown how many people the scheme has been marketed to.
However estimates of the cost to the Exchequer for a similar scheme in the
past, were in the region of £200m, HMRC said.
The scheme works by attaching an option to an acquisition of listed shares.
The option gives the seller the choice to buy back the shares in return for the
buyer paying a reduced amount to purchase the shares.
However, the donor is able to claim relief on the full value when donating
these to charity.
The value of relief is far in excess of what was paid for the shares, or
their value to the charity,” HMRC warned.
“The Government has today closed down an abusive tax avoidance scheme, which
attempted to exploit tax relief’s for charitable giving,” an HMRC spokesman
statement by the Financial Secretary to the Treasury, made it clear that
HMRC is determined to ensure that tax reliefs for charitable giving are not
abused by the tax avoidance industry.
“These tax reliefs provide valuable incentives to encourage people to give
and provide support to the charity sector.
“This targets those who use avoidance schemes and will not impact on genuine
charities or donors. HMRC will be consulting with charities on the draft
legislation which will be included in Finance Bill 2010.”
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