Though the timing is rather politically convenient, bringing welcome news for Liberal Democrats just ahead of the tuition fees vote, the substance of today’s news on tax avoidance is very welcome.
Two steps are being taken immediately with another three to follow and, crucially, a study into introducing a General Anti-Avoidance Rule (GAAR) has also been commissioned.
This review will be carried out by Graham Aaronson QC and consider whether “it could deter and counter tax avoidance, whilst providing certainty, retaining a tax regime that is attractive to businesses, and minimising costs for businesses and HMRC”.
The two immediate steps are:
- preventing groups of companies using intra-group loans or derivatives, to reduce the group’s tax bill, and,
- addressing schemes where a company does not fully recognise certain amounts in its accounts involving loans and derivatives.
The three further measures to come are:
- addressing the practice of disguised remuneration,
- stopping investment companies retrospectively changing the currency they prepare their accounts in for tax purposes, and,
- tackling businesses who artificially split the supply of services to reduce VAT.
The Treasury’s press release states:
These announcements will protect forecast revenues estimated at up to £5billion over the next 4 years, and are expected to raise over £2billion in additional revenue during the course of this parliament.
Full details of the estimated financial impact of the measures will be certified by the Office for Budget Responsibility as part of the 2011 Budget process.
A consultation was also published today on bringing inheritance tax on transfers of property into trust within the tax avoidance disclosure regime.