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Business criticises tax avoidance changes
A leading business group has criticised the Government’s plans to introduce a General Anti Avoidance Rule (GAAR), arguing that it ‘would not be in the interest of the Government, taxpayers, or UK competitiveness’.
On Monday the Treasury announced a package of measures aimed at tackling tax avoidance including a study, led by Graham Aaronson QC, to examine the introduction of a GAAR.
However, the Confederation of British Industry (CBI) said that while it ‘acknowledges the nature of the Coalition commitment to consider the introduction of a GAAR’, doing so would bring ‘a very unwelcome element of uncertainty to the tax system.’
Other changes announced by the Treasury include:
· the introduction of legislation to prevent groups of companies using intra-group loans or derivatives, to reduce the group’s tax bill, and,
· addressing schemes where a company does not fully recognise certain amounts in its accounts involving loans and derivatives.
Meanwhile, David Gauke, Exchequer Secretary to the Treasury, has also confirmed that three further measures will be set out in more detail at a later date. These include: addressing the practice of disguised remuneration; stopping investment companies retrospectively changing the currency they prepare their accounts in for tax purposes; and tackling businesses that artificially split the supply of services to reduce VAT.
The Treasury estimates that the measures will raise £2 billion in additional revenue over the course of the Parliament.