TaxCorporate TaxBudget 2010: Chancellor ratchets up war on avoidance

Budget 2010: Chancellor ratchets up war on avoidance

Budget policy decision papers unveil the expected raft of anti-avoidance measures which puts advisers on notice

The government’s stated crackdown on avoidance and evasion has been reflected
by a raft of measures in the budget.

Individuals and businesses and advisers have all been put on notice by the
government today.

The moves which include clampdown on the companies’ double taxation relief
moves, income tax advantages gained by securities transactions, stamp duty
avoidance, the strengthening of disclosure rules for tax planning schemes- are
set to rake in £1.5bn in additional yield, the government said.

“The government on taking further action to change the game for those seeking
to bend and break the rules on tax,” the government said in a press notice
today.

But advisers are worried that the moves are far too heavy-handed and will
catch vulnerable smaller companies out.

Cathy Corns tax partner at Mercer & Hole said: “The legislation is
hideously complex. I am especially worried about a consultation on employment
related securities.

“The law was brought in to clampdown on avoidance by bigger companies but
smaller companies often find themselves caught without realising there may be a
problem.”

Chas-Rhoy Chowdhury, head of taxation policy at ACCA said, “More tax planning
and loopholes are being closed down and this is a way to raise money for HMRC
and the Treasury. The focus will be on tax advisers’ conduct, but this will come
later in the year.

Richard Woolwich tax partner at DLA Piper said one avoidance measure had been
specifically aimed at affluent homeowners after the increase in duty to 5% on
homes worth £1m or more.

The temporary removal of SDLT for purchases of residential property below
£250,000 was predicted although may not in reality have much impact on the
housing market,” said Woolwich, “but the increase to 5% SDLT for residential
purchases above £1m to pay for this looks political and it will be difficult for
the Tories to remove it, if they win the next Election, as such removal would
appear to favour only the very well-off in difficult times.

“Avoidance schemes to avoid such SDLT must be disclosed.”

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