New penalties for professionals who assist tax evasion will be unveiled tomorrow, chancellor George Osborne announced in his budget speech today.
The speech also confirmed that the government intends to press ahead with its 'Google tax' on diverted company profits.
A widely trailed series of announcements set out the government's plans for raising £3.1bn from new measures on tax avoidance and evasion. These include:
- Legislation for the new international Common Reporting Standard agreed by 92 countries. Regulations giving effect to these agreements will be laid shortly, the Treasury said.
- The diverted profits tax, announced in last year's autumn statement and aimed 'at large multinationals who artificially shift their profits offshore' will be brought into effect at the end of April. The Law Society last month warned against introducing the tax in haste, saying it might hit unintended targets and deter inward investment;
- Amendments to corporation tax rules to prevent 'contrived loss' arrangements;
- Closing loopholes in entrepreneurs' relief to ensure it is available only to those selling 'genuine stakes' in businesses. These changes could affect the sale value of 'goodwill' in businesses such as law firms. The Treasury's Budget document states that: 'The government will also ensure that entrepreneurs’ relief on the disposal of personal assets used in a business is only available when someone is making a meaningful withdrawal from that business.'
Osborne also announced a review into the use of deeds of variation to cut inheritance tax.
Details on the new penalties will be announced by the chief secretary to the Treasury tomorrow, Osborne said.
Osborne made no mention of LLP taxes in the speech. However, the budget document states that the government will 'consider or take forward' over 70% of the recommendations of the Office of Tax Simplification's review of partnerships, published in January.
Responding to the budget, Dawn Register, partner, tax dispute resolution at business adviser firm BDO, said that the tax avoidance announcements sent a popular message to voters.
'The difficulty will be defining who is a caught by these new rules, and legislation with retrospective effect always leaves a nasty taste even if most people agree with the measures. There is a consistent theme of increasing powers for HM Revenue & Customs.'