Taxpayers will no longer be able to use high-risk tax avoidance schemes which exploit HMRC rules, the government said today, amid a widespread clampdown on tax avoidance.
Some high risk schemes exploit a cash flow advantage of retaining tax whilst continuing to dispute a liability.
This advantage results from tax and interest only becoming payable under some tax regimes once HMRC has proven each use of a scheme to fail.
The government plans to remove the cash flow advantage of using such avoidance schemes.
It will also bring forward proposals to list specific schemes in regulations, with a range of options to ensure that users of the listed schemes do not benefit from retaining the tax in dispute.
It will also clamp down on avoidance through reliefs for income tax losses, particularly where losses can be used to reduce tax due on other income of the same or a previous year.
Unauthorised unit trusts will also be targeted to ensure that commercial use of these structures is not disadvantaged, whilst minimising the scope to use them for avoidance.
The anti-avoidance strategy is detailed in a separate document published alongside the Budget, written by David Gauke MP, exchequer secretary to the Treasury.
He says the strategy should bring in around £7bn per year in additional revenue by 2014/15.
"Tax avoidance represents a significant part of the UK tax gap. Unlike evasion, it is not in itself illegal, but it involves using the tax law to get a tax advantage that Parliament never intended," he says.
"It frequently involves contrived, artificial transactions that serve little or no purpose other than to reduce tax liability. And it enables some taxpayers to gain an unfair advantage, undermining confidence in the tax system."
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