Budget (3) – Anti avoidance schemes

The Chancellor has announced a requirement for ‘tax avoidance schemes’ to be registered with the Revenue. It is not yet known if this will include some schemes used by some freelancers.

There will be a requirement (similar to that in the USA) for accountants to register tax schemes with the Revenue before they are introduced.

We will need to see the details to see exactly how this will work and whether the various composite and umbrella schemes operated for freelancers will be classified as tax avoidance schemes and therefore covered by the rules.

The Chancellor did not announce any form of general anti-avoidance legislation at this time.

Tackling tax avoidance

The Treasury said:

“The Government is introducing a new disclosure measure to counter large-scale avoidance of direct taxes. This will require those who devise and market certain avoidance schemes to provide the Inland Revenue with details of these schemes. This will improve transparency and allow the Inland Revenue to make a swifter and more targeted response to deliberate abuses of the tax system.

“This will be complemented by measures to improve transparency in VAT transactions. A register of VAT abusive avoidance schemes will be published, and businesses with an annual turnover of £600,000 or more will be required to disclose use of these schemes to Customs and Excise. Businesses with an annual turnover of £10 million or more will also be required to disclose details of VAT schemes and arrangements that meet certain criteria.

”The Inland Revenue and Customs & Excise have begun discussions with the tax administrations of Australia, Canada and the United States to establish a joint task force to increase collaboration and coordinate information about abusive tax transactions. They plan to share expertise, best practices and experiences within the framework of the four countries' existing tax treaties. Representatives of the four administrations will be meeting in Washington shortly to finalise plans for this initiative.”

UKTECH will be continuing coverage of the issues relevant to freelancers during the day, with expert comment and analysis.