Government has brought forward proposals to restrict tax avoidance in a move expected to save £5bn over the course of Parliament.
The Treasury says the measures are a “necessary step” to protect the Exchequer and maintain “fairness” for taxpayers, while providing certainty for businesses.
Two measures will be brought in with immediate effect. Firstly, groups of companies will be prevented from using intra-group loans or derivatives to reduce tax bills. Secondly, rules will be brought in to address schemes where a company does not fully recognise certain amounts in its accounts involving loans and derivatives.
Further measures due to be set out “shortly” will seek to reduce tax avoidance through addressing the practice if “disguised remuneration, stopping investment companies retrospectively changing the currency they prepare their accounts in for tax purposes, and tackling businesses who artificially split the supply of services to cut VAT bills.
In addition, Treasury exchequer secretary David Gauke has asked Graham Aaronson QC to lead a study into a General Anti Avoidance Rule, with a remit to consider whether a GAAR could deter and counter tax avoidance, while providing certainty, retaining a tax regime that is attractive to firms, and minimising costs for companies and HMRC.
Standard Life head of pensions policy John Lawson says the reforms are likely to impact on large businesses with internal teams of accountants.