PN 3
12 March 2008
Budget 2008
Ensuring fairness for all taxpayers
The Chancellor today announced a series of measures to ensure that all individuals and companies pay their fair share of tax.
The Government is determined to continue to challenge those who try to reduce their tax payments in an unfair way, and to support those who seek to comply. The Budget package includes a strengthening of the disclosure regime, and the use of targeted anti-avoidance measures as a proportionate response to those who seek to avoid paying their fair share. These measures support the provision of public services whilst protecting the UK's competitive business environment.
Many of these measures have been informed by the disclosure rules, which allow HM Revenue and Customs (HMRC) to identify and target specific risks to the tax system.
Details
Tackling avoidance and protecting tax revenues
Improvements to avoidance scheme disclosure regime
The Government today announced amendments to the disclosure regime to improve the process of disclosure of Scheme Reference Numbers from promoters to end users of schemes. This will improve identification of users of these avoidance schemes, thereby providing fairness for those taxpayers who already comply.
Details of the measure are set out in Budget Note 67.
Sideways loss relief - closure of avoidance schemes
The Government today announced a measure, effective immediately, to counter the continued avoidance of tax through the use of sideways loss relief. These schemes, involving individuals acting other than in partnership, are a variation of schemes involving the abuse of partnership structures, which the Government took action to tackle on 2 March 2007. At that time, the
Government made clear that avoiding tax through the use of sideways loss relief is unacceptable.
Details of the measure are set out in Budget Note 63.
North Sea management expenses
The Government today announced a measure, effective from today, to close a loophole that has allowed oil and gas companies to offset the expenses of managing their investment business against their ring-fenced profits. This activity runs counter to the clear and consistent principle that losses cannot be brought into the ring-fence to offset profits from oil and gas production.
Details of the measure are set out in Budget note 26.
Financial products avoidance: Disguised interest and Transfers of income streams
The Government today announced targeted legislation, effective from today, to address avoidance involving financial products. These cover schemes relating to:
- Transfers of income streams by transfers of rents under a lease of plant and machinery; and
- Disguised interest, where arrangements are entered into to avoid tax on returns that are economically equivalent to interest.
The Government also announced that the introduction of principles-based legislation in these areas would be deferred to Finance Bill 2009 to allow more time for consultation.
Details of the measures are set out in Budget Note 21.
Partnership and trust avoidance in the controlled foreign companies (CFC) legislation
The Government announced action, effective from today, to counter avoidance schemes used by some international groups of companies to circumvent the application of the CFC legislation through the use of trusts and partnerships.
Draft legislation and the draft explanatory note have been published on the HMRC website today, prior to inclusion in Finance Bill 2008.
Details of the measure are set out in Budget Note 22.
Corporate intangible assets regime
The Government today announced a measure, effective from today, to clarify that the related party rules in the corporate intangible assets regime are unaffected by a company or partnership's administration, liquidation or insolvency arrangements.
Details of the measure are set out in Budget Note 23.
Capital allowances buying and acceleration
The Government today announced a measure to counter arrangements intended to make capital allowances available to groups with no long-term interest in a trade, and to accelerate the rate at which capital allowances are available.
The measure will have effect where a company sells its trade on or after today.
Details of the measure are set out in Budget Note 24.
Life insurance companies: interest paid and regulatory waivers
The Government announced a measure, effective from today, to ensure that interest paid by a life insurance company on a deposit-back from a reinsurer, as part of an arrangement to reinsure pension business, is correctly allocated to that business.
Details of this measure are set out in the Budget Note 37.
The Government will in future give consideration to whether Financial Services Authority waivers should be disregarded where there could be serious loss of tax, but only after discussion of the effect of specific waivers with the insurance industry.
Double Taxation Treaty Abuse
The Government today announced measures to tackle an avoidance scheme that seeks to use the UK's Double Taxation Agreements (DTAs) to avoid UK tax. This involves artificially diverting income of a UK resident individual to a foreign partnership comprised of foreign trustees and claiming that the provisions of the UK's DTAs exempt the partnership profits from UK tax, not only in the hands of the foreign partners but also in the hands of the UK beneficiaries.
Details of the measure are set out in Budget Note 66.
Employment related securities and earnings
The Government today announced a measure, effective from today, to clarify the 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.
Draft legislation and draft explanatory notes have been published on the HMRC website today, prior to inclusion in Finance Bill 2008.
Details of the measure are set out in Budget Note 25.
Stamp duty land tax (SDLT)
The Government announced today that, following consultation, it will extend the SDLT disclosure rules to residential property worth at least £1m. This will be enacted by secondary legislation later this year, following consultation on the detail.
The Government also today announced a measure, effective from today, to counter schemes that aim to avoid the payment of SDLT by misusing group relief provisions and provisions that relieve financial institutions from SDLT using alternative finance schemes to lease property to a person.
Legislation will be included in Finance Bill 2008 and details of this measure are set out in Budget Note 58.
Income shifting
The Government firmly believes it is unfair that some individuals can arrange their affairs to gain a tax advantage by shifting part of their income to another person who is subject to a lower rate of tax.
The Government has considered the responses received to the recent consultation and believes that a further period of consultation will ensure that legislation in this area provides clarity and certainty for businesses and their advisers.
The Government now intends to introduce legislation through Finance Bill 2009 and will not enact legislation effective from 6 April 2008.
Strategy to protect tax revenues
The Government is committed to supporting those who want to comply, and to deterring and challenging those who attempt to pay less than their fair share.
The comprehensive action it has taken has already reduced underpayments of tax, as well as reducing costs for compliant tax payers. Protecting Tax Revenues, published by HMRC alongside the Budget, sets out the progress made so far and how HMRC is responding to new challenges by further strengthening its strategy.
Vehicle excise duty (VED) refunds
The Government today announced that VED refunds will be restricted to the registered keeper of a vehicle and applicable only when a vehicle: has been stolen, destroyed, sold or otherwise disposed of; become eligible for a nil license; declared as statutorily off-the-road; or permanently exported. This will help ensure that motorists cannot avoid paying a pre announced rate of VED.
Transitional period for VAT claims
The Government today announced that claims for repayment of VAT, for the tax periods indicated below, will become subject to a three-year time limit on 1 April 2009:
- Tax periods before 4 December 1996 (tax previously overdeclared)
- Tax periods before 1 May 1997 (tax previously underclaimed).
Details of the measure are set out in Budget Note 78.
UK Borders Agency and Strategy for Tackling Tobacco Smuggling
The creation of the new UK Borders Agency (UKBA), integrating the frontier work of HMRC with the Borders and Immigration Agency and UK Visas, represents an opportunity to enhance Government's strategy to combat excise fraud.
The Chancellor has therefore asked Liam Byrne, Minister responsible for the new agency, to develop a comprehensive strategy to exert further downward pressure on the volume of tobacco smuggling. To be developed and published by the UKBA by the time of the Pre-Budget Report this year, it will specify how the UKBA will aim to improve both detection and deterrence by, for example:
- using the range of data sources available to the new Agency to improve targeting of high risk freight movements (particularly from within the EU);
- exploiting the expanded reach of the UKBA at all points of entry/exit, e.g. to tackle tobacco smuggling at regional airports;
- working with postal and fast parcel couriers to curb the increasing use of those services by smugglers squeezed from other routes; and
- building on the experience in the visa and immigration areas by improving links with the international transport community to work with them to prevent misuse of their services by tobacco smugglers.
Notes to editors
HM Treasury Press Office
Press enquiries: 020 7270 5238
Non-Media enquiries: 020 7270 4558
HM Revenue & Customs Press Office
Press enquiries:
020 7147 0798 / 2328 (Business Tax Desk)
020 7147 2318 / 2333 / 2319/ 0051 / 0394 (Personal Tax Desk)
020 7147 2314 / 0052 (Law Enforcement Desk)
07860 359544 (Out of hours)
Government department internet sites
Further information and all published documents relating to Budget 2008 may be found on the Internet at the following addresses:
HM Treasury: www.hm-treasury.gov.uk
HM Revenue & Customs: www.hmrc.gov.uk
|
|||
 |
|||
|