Main anti-avoidance measures
The Budget announced a significant crackdown on offshore tax evasion, tax avoidance and aggressive tax planning in four key areas.
Offshore tax evasion
The Isle of Man, Guernsey and Jersey have agreed to enter automatic tax information exchange agreements with the UK. HMRC has also put disclosure facilities in place to allow investors with accounts in these states to settle their past tax affairs in advance of the information being automatically exchanged. The government aims to sign similar agreements with other jurisdictions.
Avoidance of employment taxes
There will be consultation on measures to remove the presumption of self-employment for limited liability partnership (LLP) partners and to tackle the disguising of employment relationships through LLPs. There will also be provisions to counter the artificial allocation of profits to partners in LLPs and other partnerships to achieve a tax advantage.
The government will strengthen the rules to ensure that offshore employment intermediaries pay the correct amounts of income tax and NICs.
Tax avoidance schemes
A General Anti-Abuse Rule (GAAR) will be introduced in Finance Bill 2013. There will be consultations on proposals to target the promoters of tax avoidance schemes, including ‘naming and shaming’ as well as a range of targeted disclosure requirements and associated penalties. Retrospective legislation will address aggressive SDLT avoidance schemes, particularly those exploiting ‘transfer of rights’ rules.
Suppliers bidding for government contracts will be required to declare they have complied with specified tax obligations, allowing government departments to exclude non-compliant bidders.
The tax provisions for unauthorised unit trusts will be amended to remove avoidance opportunities while simplifying the rules and reducing administrative burdens for exempt investors.
The IR35 provisions will be changed to equalise the tax and NIC treatment of office holders.
There will be a change to the IHT rules for the calculation of the value of an estate where there is an outstanding debt. For example, this may depend on whether the debt is repaid and its commerciality.
Corporation tax (CT)
The government will work towards reform of international tax standards to counter tax avoidance. The Organisation for Economic Co-operation and Development (OECD) will present proposals to the G20 in July 2013.
There will be immediate action to prevent the practice of ‘loss buying’, where companies pass the potential to gain access to CT loss relief to unconnected third parties.