From the Budget:
4.64 The disclosure regime, introduced at Budget 2004, allows the Government to respond to avoidance swiftly and in a targeted fashion. Following announcements at the 2007 Pre-Budget Report and subsequent consultations, the Government will legislate in Finance Bill 2008 to improve the existing system of identifying users of disclosed tax avoidance schemes,
and will legislate later in 2008 to extend the stamp duty land tax (SDLT) disclosure rules to residential property worth £1 million or above. A formal response to this aspect of the consultation will be published in due course, including the timetable for consulting on and introducing secondary legislation.
4.65 The Government announces measures to address a number of avoidance schemes, many of which have been identified through the disclosure regime:
•• ending of the use of artificial arrangements by individuals to create trading
losses to offset against other income through sideways loss relief;
•• closure of a number of highly artificial avoidance schemes involving
partnerships and trusts that seek to avoid a charge under the controlled
foreign companies rules;
•• clarification that the application of the related party rules in the corporate
intangible assets regime is unaffected by any insolvency arrangements in
which any company or partnership may be involved;
•• clarification of legislation relating to employment-related shares and
securities, to ensure rules to prevent double taxation are not exploited to reduce the amount of tax and national insurance paid on employment income;
•• confirmation that a company’s relief on its pension contributions in a given
year are limited to the actual contributions it has made in that year;
•• clarification of SDLT anti-avoidance provisions introduced in Finance Act
2008, to tackle SDLT avoidance which exploited legislation intended to help
the transfer of property between different partners within an investment
partnership; and
•• measures to counter two schemes designed to avoid payment of SDLT. The first scheme misuses provisions intended to help financial institutions using alternative finance schemes. The second scheme misuses provisions to allow group relief from SDLT.
4.68 The Government announces, with retrospective effect from 12 March 2008, clarification of indefinitely retrospective legislation introduced in 1987 to counter double taxation treaty avoidance schemes, so that the legislation applies as intended and is effective.
This will ensure that, notwithstanding the wording of any double taxation treaty, UK residents pay UK tax on their profits from foreign partnerships. Budget 2008 announces there will also be a further measure to prevent future tax avoidance through the misuse of double taxation
treaties by UK residents.
4.64 The disclosure regime, introduced at Budget 2004, allows the Government to respond to avoidance swiftly and in a targeted fashion. Following announcements at the 2007 Pre-Budget Report and subsequent consultations, the Government will legislate in Finance Bill 2008 to improve the existing system of identifying users of disclosed tax avoidance schemes,
and will legislate later in 2008 to extend the stamp duty land tax (SDLT) disclosure rules to residential property worth £1 million or above. A formal response to this aspect of the consultation will be published in due course, including the timetable for consulting on and introducing secondary legislation.
4.65 The Government announces measures to address a number of avoidance schemes, many of which have been identified through the disclosure regime:
•• ending of the use of artificial arrangements by individuals to create trading
losses to offset against other income through sideways loss relief;
•• closure of a number of highly artificial avoidance schemes involving
partnerships and trusts that seek to avoid a charge under the controlled
foreign companies rules;
•• clarification that the application of the related party rules in the corporate
intangible assets regime is unaffected by any insolvency arrangements in
which any company or partnership may be involved;
•• clarification of legislation relating to employment-related shares and
securities, to ensure rules to prevent double taxation are not exploited to reduce the amount of tax and national insurance paid on employment income;
•• confirmation that a company’s relief on its pension contributions in a given
year are limited to the actual contributions it has made in that year;
•• clarification of SDLT anti-avoidance provisions introduced in Finance Act
2008, to tackle SDLT avoidance which exploited legislation intended to help
the transfer of property between different partners within an investment
partnership; and
•• measures to counter two schemes designed to avoid payment of SDLT. The first scheme misuses provisions intended to help financial institutions using alternative finance schemes. The second scheme misuses provisions to allow group relief from SDLT.
4.68 The Government announces, with retrospective effect from 12 March 2008, clarification of indefinitely retrospective legislation introduced in 1987 to counter double taxation treaty avoidance schemes, so that the legislation applies as intended and is effective.
This will ensure that, notwithstanding the wording of any double taxation treaty, UK residents pay UK tax on their profits from foreign partnerships. Budget 2008 announces there will also be a further measure to prevent future tax avoidance through the misuse of double taxation
treaties by UK residents.
Comment