Brown Expected To Renew Corporate Tax Evasion Offensive

by Robert Lee, Tax-News.com, London

30 November 2004

UK Chancellor of the Exchequer Gordon Brown is expected to use the pre-Budget report later this week to renew his attack on corporate tax evasion, by announcing the closure of a loophole used by firms to market tax avoidance schemes that the Treasury has ruled are abusive.

According to a report in the Financial Times, Brown has been angered that some tax advisors have continued to sell certain tax schemes in spite of new disclosure rules introduced earlier this year, which were designed to clamp down on such abusive schemes.

According to the Financial Times, Treasury officials have found evidence that some tax advisors have been exploiting the window between the launch of an avoidance scheme and when it must be disclosed to the Inland Revenue, heavily marketing the product during the five day period in question.

Furthermore, officials believe that the tax industry has increased marketing efforts on schemes that were introduced before the new disclosure rules came into effect.

Nevertheless, Brown is expected to announce that on the whole, the new disclosure regime has been a success for the government.

The FT indicated that 450 schemes have been disclosed to the Inland Revenue relating to PAYE, National Insurance, capital gains tax, controlled foreign companies and accounting standards. Over 80% of those disclosed have reportedly been closed down.

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