By Daniel Hunter
The Government has today (Friday) announced the immediate closure of an avoidance scheme which was being marketed as a way for companies to artificially reduce their corporation tax bills.
This move will protect the Exchequer from potential losses of tens of millions of pounds.
The scheme, which sought to exploit rules that automatically allow certain types of expenditure to be deducted from profits, was notified to HMRC this week. This is a wholly artificial arrangement set up for no other purpose than to avoid tax and HMRC will challenge any attempts made to use it before the new legislation comes into effect today.
Draft legislation and further details of this measure can be found on the HMRC website.
“This Government has made it very clear that we will not put up with tax avoidance which uses artificial structures to aggressively exploit rules contrary to Parliament’s intended purpose," Exchequer Secretary David Gauke said.
"Within days of HMRC being notified of the existence of this scheme we took decisive steps to shut it down once and for all.
“The vast majority of people and businesses in the UK pay what they owe but a minority try to dodge their taxes by getting involved in contrived and artificial avoidance schemes. We have made significant investment in HMRC to pursue tax-dodgers and collect an additional £9 billion by 2014.”
The Government will introduce a new General Anti-Abuse Rule (GAAR) next year. The GAAR will give additional, general protection for the Exchequer against abusive arrangements of this kind.
Join us on