Compliance And Anti-Avoidance

Other Anti-avoidance Measures

Disclosure Regime
Budget 2004 introduced a disclosure regime that has enabled the Government to respond to tax avoidance more swiftly and in a more targeted fashion.

In order to better identify and tackle those who make use of marketed avoidance schemes, the Government will consult on options to improve the operation of Scheme Reference Numbers.

Following on from action in 2006/07 on stamp duty land tax avoidance, the Government will consult with interested parties later this year on how to extend the disclosure regime to high value residential property transactions.

The Government will also consult with interested parties later this year on the practicalities of addressing the use of special purpose vehicles to reduce stamp duty land tax liability on high value residential property.

Financial Products - Disguised Interest
Action is being taken, effective immediately, to counter attempts by some companies to get around the shares as debt rules, which apply to interest income disguised as a capital gain or ‘tax nothing’.

Interest Relief Exploitation
Action is being taken, effective immediately, to tackle avoidance schemes seen as abusing the availability of interest relief through the payment of interest in advance.

Leasing Avoidance
Action is being taken, with immediate effect, to prevent two types of arrangement that seek to avoid tax through the leasing of plant and machinery. The measures will counter avoidance involving the sale and finance leaseback of plant or machinery and attempts to exploit long funding leases to create a tax loss where there is little or no commercial loss.

Life Insurance Companies
Legislation will be introduced to prevent life insurance companies from benefiting from tax relief for expenses in respect of reinsured business which have been met by the reinsurer of that business.

This will apply to transactions entered into on or after 9 October 2007 (and from 2008 to amounts spread forward in respect of earlier transactions).

Tackling Vehicle Excise Duty (VED) Evasion
To assist in the fight against VED evasion, the Government has now strengthened VED enforcement powers to include motorists driving unlicensed vehicles and parking in areas where enforcement is not currently permitted.

Therefore in addition to public roads, from 1 September 2008 VED enforcement will also cover vehicles parked in public places that are not intrinsically part of a private dwelling, where a Statutory Off Road Notification has not been made.