FIVE TAX AVOIDANCE STRATEGIES have been shut down by the coalition government in the chancellor’s Autumn Statement, it has emerged.
Double taxation relief on foreign bank levies; tax mismatch schemes; property total return swaps; manufactured payments; and payments of patent royalties were all blocked.
The abuse of double taxation relief on foreign bank levies saw claims made for reliefs for foreign bank levies against their UK tax bill, while tax mismatch schemes involved the use of what the government calls “asymmetric tax treatment of loans or derivatives” in company partnerships.
Property return swaps were used to convert capital losses within a group into income losses and also used legislation to generate gains which are not in proportion to those actually arising from swap contracts.
In manufactured payment schemes, companies would lend stock, and instead of receiving a taxable manufactured payment, would receive value in another, non-taxable, form.
Income tax relief for non-trade payments of patent royalties has also been abolished in order to counter a scheme exploiting the relief, while the Treasury believes there is little use of the credit by compliant taxpayers.
The legislation shutting down the schemes is effective immediately (5 December) and be included in the Finance Bill 2013. The Treasury also believes the move will simplify the tax code.
Reeves tax partner Geraint Jones said: “These initiatives are to be welcomed, especially those that address clearly uncommercial and abusive structures involving derivatives or swaps.”
HMRC has outlined a change in VAT policy to the treatment of dwellings that have been formed from either the construction of new buildings, or from the conversion of non-residential buildings
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The government is pressing ahead with changes to the way it taxes individuals with a foreign domicile