In recent months the Government has vowed to come down hard on tax avoidance. This was reiterated in the 2012 Budget, on 21 March; as Osborne declared that tax avoidance schemes avoiding stamp duty land tax, inheritance tax, income tax and corporation tax will be closed down to protect revenues.
In his 2012 Budget statement, Osborne announced that his goal was to create a tax system that lifts the lowest paid out of paying tax and increases tax revenues collected from Britain’s wealthiest.
Honouring that the majority of wealthy people pay their taxes, Osborne said that under the last Government some high earners boasted that their accountants helped them to pay ‘less in tax than their cleaners’.
“I regard tax evasion and – indeed – aggressive tax avoidance – as morally repugnant,” stated Osborne in his Budget 2012 statement on 21 March 2012.
“We’ve increased both the resources and the number of staff working on evasion and avoidance at HMRC.
“Taken together, the anti-avoidance measures in this year’s finance Bill will increase tax revenue over the next five years by around £1 billion – and protect a further £10 billion that could have been lost,” he added.
To tackle ‘morally repugnant’ tax avoidance schemes, the Chancellor of the Exchequer plans to introduce a General Anti-Avoidance Rule (GAAR).
Confirmed in his budget statement, George Osborne said that details of the General Anti-Avoidance Rule will be consulted and ‘legislate for it in next year’s Finance Bill’.
“On coming into office, I asked Graham Aaronson QC to establish whether a General Anti-Avoidance Rule could work in the UK tax system.
“He recommended that such a rule would improve our ability to tackle tax avoidance without damaging the competitiveness of the UK as a place to do business.
“So we will introduce one,” Osborne said in his Budget 2012 statement on 21 March.
Although tax avoidance is the legal structuring of one’s tax affairs, the Government will shut down aggressive tax avoidance schemes that abuse tax avoidance.
For example, last month HM Revenue and Customs (HMRC) closed down two ‘aggressive’ tax avoidance schemes adopted by high street bank, Barclays, to avoid millions of pounds in tax.
Click here to read ‘HMRC Closing Aggressive Tax Avoidance Schemes Used by Barclays’.
Introduction of a General Anti-Avoidance Rule (GAAR) is most likely to affect companies and Britain’s high net worth individuals; generally paying the most tax, Britain’s wealthy are more advantaged through the use of tax avoidance schemes.
Tax avoidance schemes that will be deemed as ‘aggressive’ and affected by introduction of the GAAR are yet to be known.
More information on the General Anti-Avoidance Rule is expected to develop over the next year.
Have you taken part in a tax avoidance scheme?
If you have a tax avoidance enquiry then on of our tax professionals can provide you with the cardinal advice you need.
KinsellaTax staff consists of ex-HM Inspector of Taxes and ex-HM Customs and Excise officers fully trained in all types of HMRC Tax Investigations.
Call KinsellaTax on 0800 471 4546 with your Tax Avoidance enquiry or click here to fill in a tax enquiry form.