PROVISIONS DESIGNED TO HELP HM Revenue & Customs impinge on tax avoidance arrangements and increase its awareness of schemes as they are established have been included in the 2013 Finance Bill.
The Bill comes hot on the heels of March’s Budget, announced by chancellor George OSborne (pictured).
Among the changes is the introduction of the General Anti-Abuse Rule (GAAR), which will take effect over the summer once it receives Royal assent. The rule will catch which are designed solely to produce a tax advantage and as such are deemed contrived and artificial. An independent, 11-strong advisory panel will review schemes and rule on their validity.
Additionally, the Disclosure of Tax Avoidance Schemes (DOTAS) legislation will be updated, with revisions consulted on during 2012. That consultation included the proposed power for the taxman to request client lists from firms and individuals suspected of providing abusive schemes. The Finance Bill includes two powers for secondary legislation which will be consulted on in early 2013 alongside other changes. The government intends to implement all the secondary legislation on a common date, later in 2013.
Other highlights included a statutory residence test, with legislation to be brought in with the Bill taking immediate effect, including a facility to allowing tax years to be split into a UK part and an overseas part, while new rules will be introduced for the taxation of certain income and gains arising during a period of temporary non-residence in the UK.
Targeted loss-buying, where companies put in place arrangements whereby they sell their losses to unconnected parties will no longer be possible with the introduction of Targeted Anti-Avoidance Rule. Previously, companies were able to use planning techniques to effectively sell their corporation tax losses to unconnected third parties, which was against the principles under which losses could be used.
Legislation will also come into force enshrining an automatic information-sharing deal with the US, while provision will be put in place to ensure levies received by HMRC under the UK-Swiss agreement are not treated as taxable remittances.
More information on the Finance Bill can be seen here.
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