UK Tax Planners May Be Hit By New Disclosure Rule

by Jason Gorringe, Tax-News.com, London

17 March 2004

Reports in the UK media have indicated that the Chancellor, Gordon Brown, is to bring in a measure forcing accountancy firms and others involved in tax planning to disclose details of the tax minimisation schemes that they have sold to clients, or face stiff penalties.

The so-called ‘disclosure requirement’ will compel firms to consult with the tax authorities before selling any tax schemes to individual taxpayers or companies, and will form the basis of a tough new stance by the UK government on tax evasion.

Recent reports have suggested that the Treasury was considering introducing a special ‘tax loophole’ act, a single piece of legislation that would allow the government to close any loopholes that it considers undesirable. However, it is now thought that Brown will put this sweeping new measure on hold in favour of the disclosure requirements.

Nevertheless, one Inland Revenue estimate claimed that as much as £10 billion in additional revenue could be generated by the shutting down of all known loopholes, an attractive proposition to a Chancellor struggling to meet his own ‘Golden Rule’ of matching tax revenues with day-to-day expenditure.

The disclosure proposals have been met with widespread criticism from the accounting industry, which argues that it will be a costly system to police, and will add to an already overly complex taxation system that breeds tax planning in the first place.

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