Transfer of assets abroad and gains on assets held by foreign companies

The Government proposes to introduce changes in the Finance Bill 2013 in regard to the transfer of assets abroad and gains on assets held by foreign companies closely controlled by UK participators to protect the UK tax base.  Consultation will be published following the Budget.

 

General anti-abuse rule (GAAR)

The Government has announced that it accepts the Aaronson Report recommendations for a targeted GAAR to tackle artificial and abusive tax avoidance schemes.  By being targeted this will help to maintain the UK’s attractiveness as a place to do business whilst reducing tax avoidance. Consultation will now take place on the draft legislation to be introduced, the establishment of an Advisory Panel and the development of full explanatory guidance.

The GAAR now proposed will go further than recommended by the Aaronson Report in that it will also include Stamp Duty Land Tax. The consultation will take place during the summer with a view to legislation being included in the 2013 Finance Bill.  The Government’s stated intention is that the legislation should effectively tackle abusive tax avoidance and that the guidance that is provided should be practical for both taxpayers and HMRC.

 

Manufactured payments

The Government announced on 15 September 2011 that it intended to block a tax avoidance scheme that involved manufactured overseas dividends.  It was also announced at that time that it would consult on simplification proposals for the manufactured payments rules as part of its ongoing review of the tax code.

A consultation will be published giving opportunities for interested parties to help develop the policy, but if legislation is proposed, it will have effect only from the date of Royal Assent to the Finance Act 2013.

 

Unauthorised unit trusts

Following an earlier consultation process on reforms to the tax rules governing unauthorised unit trusts, the Government will undertake a final consultation in April 2012 with a view to including legislation on this matter in Finance Bill 2013.

 

Personal services companies and IR35

A new package of measures will be introduced in a further attempt to tackle tax avoidance through the use of personal service companies and to make the current IR35 legislation easier to understand.

These measures will include:

• Strengthening the specialist compliance teams
• Simplifying the way IR35 is administered
• A requirement for the office holders/controlling persons who are integral to the running of an organisation to have PAYE/NICs deducted at source by the organisation by which they are engaged. (This point is subject to consultation)