Tax industry planning next avoidance tricks

Link: Draft tax avoidance rules disappoint

She spoke of ‘frustration’ over ‘the creativity of a small number of accountants, tax planners, legal professionals and companies’ who devised ways round the anti-avoidance provisions in the bill before it has even become law.

She protested: ‘If they are not held in check, they are capable of ensuring that the Treasury loses vast amounts of revenue.’

Primarolo said: ‘That is the bind we are in: the government consults and publishes a bill, and while it is making progress through the various stages, other people are planning on how to negate it.’

She lashed out after launching the final report and third reading stages of the legislation in the Commons with three motions extending its scope to cover new avoidance abuses:

  • A new clause will ban ‘aggressive new avoidance schemes’ involving the sale of rental streams in a manner designed to flout the provision in the bill preventing avoidance through sale and finance lease-back and lease and finance lease-back. The crackdown involves the use of an ‘unallowable purpose’ rule.
  • New provisions will prevent companies avoiding corporation tax by entering into a range of artificial arrangements, including claiming tax relief for a manufactured payment while arranging for any counterbalancing income or gains to escape taxation.
  • An immediate bar has been placed on the manipulation of gifts of shares or securities to charities to achieve tax relief for the donor, way in excess of any benefit to the charity.

A series of further amendments within the scope of the bill will stop-up other flaws.

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