Treasury crackdown to tackle £2 billion tax cheatsMake Text Bigger
The Treasury announced new tax avoidance measures aimed at raising at extra £2 billion in tax over the next four years today.
The announcement is the first step of the government’s much-vaunted tax avoidance blitz on individuals and companies – and more will soon follow promises the Treasury.
HM Revenue and Customs is also closing a property trust loophole after a string of new schemes have emerged that help estates avoid paying the 20% tax charge levied when a property is transferred into trust.
Properties transferred in this way also avoid 40% inheritance tax (IHT) on estates worth more than £325,000.
However, the new measures will not affect people who have already set up trusts to protect their estates from inheritance tax, nor will existing trust schemes have to closed.
Other than the property trust rules, the other changes are not expected to impact on landlords – unless they are contractors or self-employed.
Property developers face VAT scrutiny
Contractors who run ‘disguised income’ schemes to avoid income tax or national insurance are a top target, with the HMRC about to release full details of new measures to tackle avoidance.
Self-employed property developers or traders who separate their businesses to avoid charging VAT are also under scrutiny.
The other measures tackle corporation tax avoidance.
The main issue for taxpayers is to cut through the Treasury’s tax terminology.
Tax avoidance is legal and a right enshrined in law by numerous court cases asserting a taxpayer’s right to pay the smallest amount of tax possible by arranging their financial affairs within the law.
What the Treasury is really after is closing tax evasion loopholes. Tax evasion is a criminal offence.
Despite savage government spending cuts, HMRC is picking up an extra £900 million funding to tackle avoidance in a bid to up the Treasury’s tax take over the next four years.
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