The government has again underlined its focus on tackling tax avoidance by closing down a scheme being marketed as a way for companies to artificially reduce corporation tax bills.
The scheme, which sought to exploit rules that automatically allow certain types of expenditure to be deducted from profits, was notified to HM Revenue & Customs (HMRC) in the week before Christmas.
HM Treasury described the scheme – which sought to generate artificial loss relief from a property business – as having been “set up for no other purpose than to avoid tax”.
Exchequer Secretary David Gauke said: “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. 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 to give additional, general protection for the Exchequer against abusive arrangements.
With careful and timely planning, it is possible to minimise your tax liability by taking advantage of legitimate tax saving opportunities. To find out more about how Milsted Langdon’s tax team can help you do this, please contact us.