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Osborne continues Government’s attack on tax avoidance

The Government has over recent years sought to clamp down on what it perceives as unacceptable tax avoidance. This theme continues in this Budget with the announcement of a consultation on an all-encompassing anti-avoidance provision known as the General Anti-Avoidance Rule, or GAAR.

Details are as yet unknown but the implications could be very wide-reaching, effecting any form of tax planning. Close scrutiny is needed of the content of consultation process to resist an over enthusiastic application of any proposed new powers.

However it progresses, it is a clear indication of the Coalition Government’s desire to curb tax avoidance schemes. This is further emphasised in the comments made regarding the extension of the Disclosure of Tax Avoidance Schemes, or DOTAS, to potentially include IHT on trusts. This will be consulted on over the summer.

Finally, the Government has advanced the previous government’s announcement in March and referred to a definitive step towards targeting Employers and Employees who utilise trusts to defer or reduce liabilities. In particular, mention is made of Employer Financed Retirement Benefit Schemes. Legislation will apparently take effect from 6 April 2011.

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