Reply to: Budget 2012

[LisaContractorUmbrella]

Courtesy of Saffrey Champness re: avoidance

ANTI-AVOIDANCE
6.1 Disclosure of Tax Avoidance Schemes (‘DOTAS’)
Tax avoidance schemes meeting certain conditions (or “hallmarks”) must be notified to
HMRC as soon as they are marketed by scheme promoters.
The Government will consult on extending these hallmarks to cover avoidance schemes
that do not currently have to be notified under the rules.

6.2 General Anti-Avoidance Rule (‘GAAR’)
In November 2011, Graham Aaronson QC produced his proposals for a General AntiAvoidance Rule (‘GAAR’). He concluded that a GAAR could be introduced to counter
tax avoidance, but only if it:
 was clearly targeted at contrived and artificial schemes
 provided safeguards for legitimate tax planning
 reduced the specific anti-avoidance provisions contained elsewhere in the tax
legislation.


The burden of proof would lie with HMRC and published guidance notes would be taken
into account in determining whether the GAAR applied.
The Government has agreed that a GAAR should be introduced and a consultation
document will be issued in summer 2012, with a view to legislation in 2013. The
Government has stated that the GAAR will be based on Aaronson’s proposals, but has not
yet confirmed whether other anti-avoidance provisions will be repealed.

6.3 Changes to anti-avoidance provisions applying to offshore structures
The Government will be consulting on draft legislation to reform the anti-avoidance
provisions relating to the transfer of assets abroad and the attribution of gains to members
of non-resident companies. Gains from furnished holiday let properties will become
eligible for exemption from a capital gains tax charge. The amendments will be included in
the Finance Bill 2013.

6.4 Other anti-avoidance measures
The following other anti-avoidance measures to combat particular marketed tax avoidance
schemes were announced:
 various technical improvements will be made to current anti-avoidance rules to
combat tax schemes which generate capital allowances. Some of these new changes
took effect on 12 August 2011, the remainder will come into force on 6 April 2012
 a scheme which seeks to avoid SDLT via use of sub-sales and an option to purchase
land will be closed with effect from 21 March 2012. HMRC’s view is that the
scheme did not work in any event, but the new legislation is intended to put the
matter beyond doubt
 another scheme involving the purchase of offshore trusts by UK domiciled
individuals to reduce inheritance tax is to be closed
 a scheme which used existing anti-avoidance rules to allow personal income to be
taxed at corporate rates will be closed
 two schemes involving life insurance investment bonds, which involve gains being
deferred or avoided altogether are to be closed
 two schemes involving relief for losses arising after the end of a trade or property
rental business were closed with effect from 12 January 2012 and 13 March 2012,
and the legislation will be included in the Finance Bill 2012
 a scheme involving property business losses relating to agricultural property was
also closed with effect from 13 March 2012. This is also to be in the Finance Bill.
Except as referred to above, the legislation closing the various tax avoidance schemes will
take effect from 21 March 2012.

[BlasterBates]

Not only this, but the GAAR report as currently stated makes no distinction between any sort of avoidance, either "good" or "bad". Even buying an ISA would theoretically be caught.

A bit far fetched. Can't imagine they'll go around the millions of people asking for tax back for putting a bit away for their pension. Nor will they go round demanding tax back because you used a different form of depreciation.

They'll be targeting all forms of avoidance which entail bending the rules. I would imagine EBT's would be a high priority.

[simondolan]

Not only this, but the GAAR report as currently stated makes no distinction between any sort of avoidance, either "good" or "bad". Even buying an ISA would theoretically be caught.

It does - it goes to quite some lengths to do exactly that and also puts the benefit of proving the "aggressiveness" on the Revenue.

Among others from the Aaronson report:

"I have concluded that a GAAR which is appropriate for the UK must be
driven by an overarching principle. This is that it should target those
highly abusive contrived and artificial schemes which are widely
regarded as intolerable, but that it should not affect the large centre
ground of responsible tax planning. "

[Vallah]

Couldn't agree more!! That mealy mouthed scumbag millionaire Osborne was on radio 4 this morning and they asked him about his stance on tax avoidance which they rightly pointed out is legal and he said that he referred to "aggressive" avoidance?!? WTF is aggressive avoidance. Typical politician, he is such a hypocrite claiming that he doesn't benefit from the change to the 50p rate, that must be because he is aggressively avoiding tax.

Not only this, but the GAAR report as currently stated makes no distinction between any sort of avoidance, either "good" or "bad". Even buying an ISA would theoretically be caught.

[russell]

Couldn't agree more!! That mealy mouthed scumbag millionaire Osborne was on radio 4 this morning and they asked him about his stance on tax avoidance which they rightly pointed out is legal and he said that he referred to "aggressive" avoidance?!? WTF is aggressive avoidance. Typical politician, he is such a hypocrite claiming that he doesn't benefit from the change to the 50p rate, that must be because he is aggressively avoiding tax.

'I'm not wealthy enough to pay the 50p tax rate' claims George Osborne (who earns minister's salary, rents out Notting Hill home and has 15% stake in the family business) | Mail Online

[JamJarST]

As did the chancellor in his speech yesterday mentioning evasion and avoidance in pretty much the same sentence.

Really winds me up it does. If you're going to go down that road then paying into a pension is tax evasion after all - you're paying into the pension and not then paying tax on it because it suits you....

Couldn't agree more!! That mealy mouthed scumbag millionaire Osborne was on radio 4 this morning and they asked him about his stance on tax avoidance which they rightly pointed out is legal and he said that he referred to "aggressive" avoidance?!? WTF is aggressive avoidance. Typical politician, he is such a hypocrite claiming that he doesn't benefit from the change to the 50p rate, that must be because he is aggressively avoiding tax.

[psychocandy]

Yep - was a fundamental quote used for years. "Every man is entitled if he can to order his affairs so as that the tax attaching under the appropriate Acts is less than it otherwise would be. If he succeeds in ordering them so as to secure this result, then, however unappreciative the Commissioners of Inland Revenue or his fellow taxpayers may be of his ingenuity, he cannot be compelled to pay an increased tax.
Thomas Tomlin, Baron Tomlin, in the UK House of Lords case, IRC v. Duke of Westminster (1936) 19 TC 490, [1936"

Doesn't fit well with today's political correctness does it. The Govt have for years now been deliberately blurring the lines between avoidance and evasion to the extent that now the general public think them to be the same thing

As did the chancellor in his speech yesterday mentioning evasion and avoidance in pretty much the same sentence.

Really winds me up it does. If you're going to go down that road then paying into a pension is tax evasion after all - you're paying into the pension and not then paying tax on it because it suits you....

[simondolan]

I don't think 'integral' means 'critical', as in an interim director. If you are managing staff, I think you are integrated into the employee structure, whereas if you are a PM who is task managing permies who sit within a separate management structure.

We could debate this but the government might take it's own view. It's the counterpart of D&C. If you are asserting line management D&C on permies, then you must be subject to it from above, or the people below you are orphaned from the main management structure.

I think we are missing a crucial part of this. It is not that you are integral, it is "office holders/controlling persons who are integral to the running of an organisation"

So, you have to be integral AND an office holder or controlling person

[BlasterBates]

In the end the description is "fluffy" but because the client takes the hit, i.e. they're responsible for paying it, and there is no advantage in avoiding it for them, it's going to be interpreted fairly conservatively, i.e. it doesn't look good.

[Old Greg]

That still wouldn't make you integral. If you were setting corporate direction or the whole company would grind to a halt if you weren't there then you're integral otherwise you're as expendable as the next person.

I don't think 'integral' means 'critical', as in an interim director. If you are managing staff, I think you are integrated into the employee structure, whereas if you are a PM who is task managing permies who sit within a separate management structure.

We could debate this but the government might take it's own view. It's the counterpart of D&C. If you are asserting line management D&C on permies, then you must be subject to it from above, or the people below you are orphaned from the main management structure.

[MarillionFan]

I'm a PM and I task manage colleagues but I don't line manage them or do their annual appraisals etc.

That still wouldn't make you integral. If you were setting corporate direction or the whole company would grind to a halt if you weren't there then you're integral otherwise you're as expendable as the next person.

[MyUserName]

I am integral to the project I am on but I am not integral to the company. I would think that would be as far as it goes for most of us?

[BlasterBates]

Have to hand it to the government this does simplify things, what they've done is shifted repsonsibility to the client, so rather than having to "police" thousands of contractors , which is impossible, there will be relatively few large companies like the banks and the government where contractors work , where the criteria will be worked out. In the end it won't be up to the contractor anymore it's the client who'll stipulate whether the role is "integral" or not. This does have similarities with Switzerland where some companies dictate that you pay your NI (Swiss equiv.) to comply with Swiss law on temporary working. Some contractors are exempt and they do allow some contractors to operate through their own company, but actually very few, most are deemed as temporary employees.

[Old Greg]

A lot of contractors manage both permies and other Contractors - as a Project Manager I do this all the time. I wouldn't consider myself integral or fundamental to the organisation though. It'll be interesting to see the government's definition of the word.

I don't have the final say in the business strategy, I don't sit on the board and usually I report progress to and request key decisions from someone else within the organisation. The Company wouldn't suffer a major financial loss if I wasn't there (they'd just hire another PM and get someone else to line manage the teams). We go in, deliver/manage something, hand it over, then move on.

I'm a PM and I task manage colleagues but I don't line manage them or do their annual appraisals etc.

[earningacrust]

A lot of contractors manage both permies and other Contractors - as a Project Manager I do this all the time. I wouldn't consider myself integral or fundamental to the organisation though. It'll be interesting to see the government's definition of the word.

I don't have the final say in the business strategy, I don't sit on the board and usually I report progress to and request key decisions from someone else within the organisation. The Company wouldn't suffer a major financial loss if I wasn't there (they'd just hire another PM and get someone else to line manage the teams). We go in, deliver/manage something, hand it over, then move on.