Treasury closes overseas tax loop
The Treasury has closed a loophole through which companies might have claimed income tax that had never been paid
A TAX AVOIDANCE scheme exploiting Manufactured Overseas Dividends has been quashed by government legislation that came into force yesterday.
Without the changes, companies could have offset or claimed repayment of UK income tax that had never been paid, potentially resulting in significant revenue loss.
David Gauke (pictured), exchequer secretary to the Treasury, said: “It is essential that everyone pays the right amount of tax at the right time. We have acted quickly to prevent the use of this particular scheme and we will not hesitate to close down other schemes representing a significant risk to the Exchequer as we become aware of them.”
A wider review of MOD tax rules will be conducted after next year’s Budget as this is an area of risk for tax avoidance.