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Darling to launch tax evasion clampdown in Budget

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23rd Mar 2010
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The chancellor is expected to announce plans that will close the net on those evading tax in some of the least co-operative tax havens.

The Budget machine is firmly in motion this week with predictions emerging left, right and centre, but one of the most recurring forecasts is that Alistair Darling will launch a series of measures designed to clamp down tax evasion.

According to a report in today’s Financial Times, the maximum penalty for offshore tax evaders is expected to be doubled to 200% of the tax owed in a clampdown on those caught evading tax in the least co-operative tax havens such as the Turks and Caicos islands.

A Whitehall official told the newspaper: “These people with large bank balances who are hiding money offshore should be running scared of this announcement. HMRC is becoming incredibly good at finding out who these people are and it’s going to cost [the evaders] a hell of a lot”.

The fines will have a wider scope than the penalties announced in the PBR, applying to all offshore evasion, said the official.

“We will see the screws turned once again on tax avoidance.  The key areas to watch for will be increased penalties for non compliance and a requirement to notify HMRC of users of disclosed schemes on a quarterly basis.  Any loopholes involving schemes which turn income into capital are likely to be tightened in time for the introduction of the 50% tax rate on 6 April,” said Andrew Hubbard, CIOT president.

George Bull, tax partner at Baker Tilly is of a similar opinion in this area: “The Budget is likely to include the introduction of a new anti-avoidance campaign targeting the conversion of income to capital and tightened settlements rules to combat income shifting may also be introduced”.

“Another possible target could be financial instruments and products. HMRC has been gathering information through the Disclosure of Tax Avoidance Schemes system. The incentive to convert income to capital is currently 22% but this is predicted to go up to 32% from 6 April”.

The new rule is likely to be described as a ‘targeted anti-avoidance rule’ (TAAR) – but rather than taking a sniper’s rifle approach, it’s likely to be more like a “blundering weapon of mass destruction”, says Bull.

 

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By johnjenkins
23rd Mar 2010 17:35

Hang on

we go from Tax evasion to tax avoidance. There is a difference you know.

Please tell me how we go from off-shore tax evasion (illegal) to Andrew Hubbard's tax avoidance income shifting(legal as proved by the House of Lords).

Ah yes, if people see the two together they might think that they are one and the same.

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By Trevor Scott
24th Mar 2010 13:53

Two cheap and easy ways to reduce tax evasion...

reduce the number of MP's and force those remaining to declare all their financial activities to an independent body.

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