For the avoidance of tax


For the avoidance of tax

Tax evasion is illegal, tax avoidance is legitimate. Well, that's the way it's meant to be. However, the Treasury has just announced legislation to tackle some forms of business tax avoidance to protect £5 billion of public money being lost.

The steps to be legislated against will prevent groups of companies using intra-group loans to reduce a tax bill; will address schemes where a company does not fully recognise certain amounts in its accounts involving loans and derivatives; will deal with the practice of disguised remuneration; stop investment companies retrospectively changing the currency used to prepare their accounts; and tackle businesses who artificially split the supplies of services to reduce a VAT liability.

In addition the the above changes, the Treasury is ordering a study into a General Anti Avoidance Rule that would be used to "deter and counter tax avoidance".

This was first published in December 2010

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