Treasury to close tax loopholes

The Treasury has unveiled a raft of tax avoidance measures which are expected to raise over £2 billion and protect a further £5 billion by 2015.

Exchequer Secretary David Gauke said the coalition is “fully committed” to tackling tax avoidance – a key pledge in the Liberal Democrats’ general election manifesto.

In a written statement to MPs, Mr Gauke outlined a series of moves aimed at closing loopholes in income, corporate and value added tax.

With immediate effect, groups of companies will be banned from using intra-group loans or derivatives to reduce their corporation tax bill.

Ministers have also proposed to tackle firms who “artificially split” the supply of their services to reduce VAT.

And they plan to clamp down on “disguised remuneration” – company schemes used to reward employees which seek to avoid or defer the payment of income tax or National Insurance Contributions (NICs).

The Treasury has signalled that it will stop investment companies retrospectively changing the currency in which they prepare their accounts for tax purposes.

Inheritance tax has not escaped the crackdown, with ministers looking to close down avoidance schemes involving the use of trusts.

Mr Gauke said all new schemes involving the transfer of property into trust will be brought into the Disclosure of Tax Avoidance Schemes (DOTAS) regime next April.

He told MPs: “These measures take the necessary steps to protect the Exchequer, and maintain fairness for the taxpayer, whilst providing certainty for businesses whose investment will encourage the re-balancing of the economy and job creation.”