Anti-Avoidance Measures

General anti-abuse rule (GAAR)

The Government accepts that a GAAR targeted at artificial and abusive tax avoidance schemes would improve the UK’s ability to tackle tax avoidance, while maintaining the attractiveness of the UK as a location for business investment. The Government will consult on this in summer 2012. The GAAR will also be extended to SDLT. The intention is to introduce legislation in Finance Bill 2013.

Stamp duty land tax (SDLT): sub-sales rules

Finance Bill 2012 will put beyond doubt that an SDLT avoidance scheme that ‘abuses’ the sub-sales rules does not work. The change makes it explicit that the grant or assignment of an option cannot be a ‘transfer of rights’. The Government will also consult on the wider approach to addressing SDLT sub-sales avoidance.

Personal service companies and IR35

A package of measures will aim to tighten up on avoidance using personal service companies, and will aim to make the existing IR35 legislation easier to understand. This will include strengthening HMRC’s specialist compliance teams, simplifying IR35 administration, and consulting on proposals requiring office holders/controlling persons integral to the running of an organisation to deduct PAYE and NICs.

Inheritance tax: offshore trusts

The excluded property and settled property provisions will be amended in the Finance Bill 2012. This will close an avoidance scheme involving the acquisition of interests in offshore trusts by UK-domiciled individuals.

Transfer of assets abroad and gains on assets held by foreign companies

As previously announced, there will be changes to the legislation dealing with the transfer of assets abroad and gains on assets held by foreign companies closely controlled by UK participators. The changes will take effect from 6 April 2012 but, exceptionally, a taxpayer may elect for the new rules to apply from 6 April 2013.

Other anti-avoidance announcements

There will also be changes designed to counter tax avoidance using manufactured payments, unauthorised unit trusts, authorised investment funds, capital allowances on plant and machinery, debt buy-backs, post-cessation reliefs, corporate settlor-interested trusts, property business loss relief, and life insurance loss relief.

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