The profession is prepared for a new tide of anti-avoidance moves when the
chancellor delivers his pre-Budget report on Monday.
The autumn has seen officials from HM Revenue & Customs announce a plan
to ‘make avoidance not worthwhile by 2008’, as well as initiatives to make
contact with senior businessmen that have been regarded as heavy-handed
John Whiting, tax partner at PricewaterhouseCoopers, pinpointed VAT schemes
as likely to be targeted: ‘We haven’t had any particular action on that front
yet,’ Whiting said, highlighting that the VAT disclosure regime had been in
place for more than a year.
The lack of VAT moves is surprising given that Chris Tailby, head of
anti-avoidance, hails from an indirect tax background at HMRC.
One suggestion has been for the introduction of a penalty system for advisers
who promote avoidance, which would be consistent with HMRC’s aim of making
avoidance ‘not worthwhile’.
Others have suggested that there could be moves on stamp duty land tax, also
only recently brought within the regime for disclosures.
Whatever happens, businesses are likely to bear the brunt of any changes:
‘With consumer confidence representing a real concern for the chancellor, he is
unlikely to risk an increase in the tax burden for individuals, which leaves him
no alternative but to target businesses,’ Aidan O’Carroll, national head of tax
at Ernst & Young, said.
The introduction of Real Estate Investment Trusts is almost certain, as Brown
has indicated it would be in the PBR in interviews, though it is unclear what
precise form they will take.
Industry bodies are nervous that the Treasury will adopt a tax structure that
will be too complicated and frustrate the intentions of the trusts. Changes to
leasing rules are also on the cards, while the Carter Review on HMRC’s
e-services strategy may be delayed.
The R&D tax credits regime, on which the government has been consulting,
may be reformed, perhaps with the introduction of a panel of scientific advisers
to rule on claims. The child tax credits regime is also regarded as an outside
bet for reform given its high-profile problems.
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