UK May Enact Tough New Anti Tax Avoidance Legislation

by Robert Lee, Tax-News.com, London

12 March 2004

As UK budget time approaches, Chancellor Gordon Brown is said to be considering tough new legislation designed to crack down on all forms of tax evasion, the Financial Times reported yesterday.

At present, the UK does not have a single, clear definition of what constitutes ‘tax avoidance’ on the statute book, meaning the government and Inland Revenue have to make changes to legislation on a case-by-case basis, often resorting to costly court actions.

Whilst Brown has managed to close down various loopholes in each of his seven previous budgets, government data cited by the FT indicates that tax avoidance is a growing problem. This suggests that £2.5 to £3 billion is lost each year in VAT fraud, whilst evasion of direct taxation is said to be in the region of £10 billion.

Consequently, it is believed that the Treasury is considering the introduction of legislation dedicated to the shutting down of tax avoidance schemes, which may operate along similar lines to that currently in place in the US and Australia.

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