Taxbriefs Commentary Library

Tax avoidance after the Budget

Danby Bloch, 22 Mar 2012


 

Do the tax avoidance provisions in the March 2012 Budget mark the end of tax avoidance? At first sight it looks pretty serious for the clients and advisers who are contemplating entering these waters.

The general anti-abuse rule (GAAR) on which the Government will be consulting further this year might look especially fearsome for tax planners.

Then there are the proposed new anti-avoidance rules on stamp duty land tax; it really does look as if you would be crazy to undertake a scheme to avoid stamp duty. New schemes involving buying and selling expensive property through offshore companies look doomed and properties sitting in the ownership of such entities also seem likely to be hit by an ongoing swingeing tax charge.

The SDLT rules indeed seem likely to be very effective – and the Chancellor has said he will move quickly to stop any new schemes in the future, acting retrospectively if he has to.

But the GAAR is almost certainly not the wide-spectrum medicine that other governments – such as the US – have introduced. The stated aim is to target egregiously abusive tax schemes. The draft legislation doesn’t define this, although it is expected that there will be some guidelines and safe harbours for practitioners.

The GAAR should not attack reasonable tax planning. So, if a transaction falls within what a statute aims to tax it should be OK to arrange the transaction in such a way that you pay less tax. But if a transaction is carried out for purely tax reasons, it seems likely to fail the test. There will be a range of tax planning from reasonable planning through to flagrant tax avoidance. The art of tax planning will be to identify where a strategy sits and make sure it corresponds to the client’s risk profile for tax planning.

On 12th June, Taxbriefs High Net Worth Tax Planning Conference 2012 will be exploring these new tax planning issues.

For more details and to book your place please visit www.highnetworthconference.com

 


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Danby Bloch

Editorial Director, Taxbriefs

Danby Bloch is the editorial director of Taxbriefs, chairman of city-based IFAs, Helm Godfrey and director of Nucleus, an independent wrap provider.

Over a period of more than 40 years, Danby has established himself as one of the industry's leading thinkers and  is a respected author, lecturer and trainer on tax and financial planning.

 

 

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