More NewsClearance plan prompts cost worries

Clearance plan prompts cost worries

Advisers express concerns that Varney plans could prove expensive

Tax advisers are concerned that HM Revenue & Customs may struggle to
implement clearance
procedures
for business tax schemes due to a lack of resources. The Treasury
has said that it will not increase budgets to deal with the change, outlined in
the Varney Review.

The review conceded a long-hoped for business request for mechanisms that
clear tax planning. But the Treasury this week told Accountancy Age
that the review will be financed within current budgets.

John Cullinane, president of the Chartered Institute of Taxation, said other
sources of service, such as local tax inspectors, could be sacrificed: ‘There
must be a question mark over this. With several thousand pages of tax
legislation, a clearance mechanism risks delivering certainty to business, at
reasonable resource cost to HMRC, only by cutting corners,’ Cullinane said.

Clearance procedures for complicated tax arrangements, which already exist in
transfer pricing, are thought to be
expensive.
HMRC has pledged to give binding views within 28 days over issues that might
have been resolved over much longer periods in the past.

Bill Dodwell, corporate tax partner at Deloitte, warned that if advisers
swamped HMRC with requests, it could struggle to cope. ‘If advisers come along
every time a client sneezes the whole structure is going to fall down,’ he said.

Some have speculated that the risk-based approach HMRC adopts could mean that
lower risk companies will see enquiries drop off significantly in order to save
cash.

Further reading:

Taxman to offer clearance
procedures

Tax
Hack

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