This budget was always likely to be more political than most.

It was to be expected that Kenneth Clarke would wish to emphasise the prudent economic management and sound public finances that are expected from a Conservative government, and re-assert Conservative tax-cutting credentials.

But, with a majority of one and a spring election, the government cannot afford a controversial Finance Bill.It should not, therefore, be a surprise that the predominant theme of the technical provisions is tax avoidance.

The opposition will not oppose cracking down on tax avoidance.

Indeed, the opposition is more likely to say that the government has not gone far enough.TAX AVOIDANCEIt is self-evident that a government must protect its tax base and that people should pay the tax the law requires.

But the devil is in the detail of the legislation and how the initiatives to crack down on supposed tax abuse are conducted.The law is not always as clear as it ought to be, and establishing that you are right and that either the Revenue or Customs is wrong can be a very expensive business.

It is already clear that what has been presented under the guise of counter-avoidance will impact far more widely upon taxpayers.Anti-avoidance legislation apart, the government has also launched its 'spend to save' initiative.

This initiative covers the whole range of fraud and abuse, evasion, avoidance and better collection and compliance.

The chancellor justifies his 'spend' -- the cost of additional tax officers -- through the tax they are expected to collect.

Because of tax avoidance, it is notoriously difficult to estimate the yield of measures.

In 1992, in looking at VAT avoidance measures, the National Audit Office noted that Customs' assessments of tax at risk and the numbers of taxpayers involved in avoidance were generally speculative.It is to be assumed that the Revenue will be looking to justify the expense in terms of tax collected.

The Law Society's revenue law committee will be concerned to see that what is targeted is the hard core and not the soft outer fringes.

The cost to taxpayers of Revenue investigation can be very high, and Revenue targets must not just be achieved because taxpayers are forced to mitigate audit and compliance costs with additional tax payments.VAT: THE OPTION TO TAXThe option to tax supplies of property for VAT purposes allows developers and landlords to recover the input VAT they incur on the building.

However, for some time, Customs has been battling to deny repayment of the input tax where the property is being supplied to partially exempt businesses, notably the financial and insurance sectors.

A blunderbuss measure is now proposed under which the option to tax supplies of property will be denied where they are made to non-taxable or partially exempt persons who can recover less than 80% of their input VAT.Potentially this could have a huge impact, as it will require landlords continuously to monitor the use being made of the property.

If, having opted to tax and having recovered VAT, the property comes to be used by a partially exempt trader, the landlord may be denied further input tax recovery and VAT already recovered may be clawed back.There is a saving for leases entered into before the budget.

For the future, however, practitioners will need to review the standard terms of their leases, for example on assignment, on rent reviews and perhaps requiring certification the tenant's VAT status.

How tenants may react to such provisions is another matter.OTHER VAT MEASURESThe large number of other VAT measures is a notable feature of the budget.

They range from changes in the retail schemes to bad debt relief, telecommunication services and groups.

The issue, however, that has gained the most attention in recent months has been the proposal to limit repayments of VAT to three years.

The government has grudgingly conceded the inequity of restricting VAT repayments in this way while retaining a six-year limit to assess underpaid VAT.

The three-year limit will apply to both from 18 July 1996 and Customs will refund tax paid under assessments made after that date that relate to periods outside the three-year limit.CAPITAL GAINS TAX AND INHERITANCE TAXLike St Augustine, the chancellor plans to abolish capital gains tax, but not now.

In the meantime, the annual exempt amount for individuals increases to £6500.

The inheritance tax threshold is increased to £215,000 from 6 April 1997.One proposal to note is that on the capital gains taxation of earn-outs on share sales.

This topic has long been in a mess.

In recent years, however, the taxation of earn-outs has largely been covered by extra-statutory concession D27.

This concession has not been without its difficulties and the interaction of earn-outs and the Finance Act 1996 legislation on loan relationships has been shrouded in mystery.The government now proposes to enact ESC D27 and this may serve as an opportunity to clarify some of the issues.There are several changes to reinvestment relief.

Among these, the test of qualifying activities will now be performed on a group basis.

Thus, the existence of one subsidiary with significant non-qualifying activities will not disqualify the investment, provided the group, looked at as a whole, qualifies.

The same change will be made for venture capital trusts and the enterprise investment scheme.

There is also to be a clearance scheme so that companies can seek Revenue confirmation that their shares qualify for reinvestment relief.SHARE REPURCHASESThe restriction on the repayment of the tax credit for share repurchases and certain special dividends was announced early in October.

This stopped a variety of arrangements that allowed market arbitrage of the tax credit on company distributions betw een taxable and exempt shareholders.

Dividends and distributions where the amount, timing or form of the distribution is 'referable to a transaction in shares or securities' will be affected but the limits of this are yet unclear.

There will, however, be exemptions for ordinary pre-sale dividends and cash paid instead of a stock dividend.CAPITAL ALLOWANCESThe proposal published in July to revise the capital allowances code for fixtures in buildings has been revised in a number of respects.

The main new proposal on capital allowances, however, is the reduction in capital allowances from 25% to 6% for long-life assets.

This looks set to be a fruitful area of dispute on asset lives.

'Long life' for these purposes covers assets that, when new, are expected to have a working life of 25 years or more.There is a de minimis limit, so that only those spending more than £100,000 in a year on such assets will be affected.

One of the main sectors that is likely to be affected by this measure is utilities.

In raising what is claimed to be a lot of revenue from this measure -- rising to £675 million in 1999/2000 -- the Chancellor is perhaps seeking to forestall the opposition's proposals for a windfall tax.

Inevitably, however, the proposal will raise the cost of capital for those industries it affects.FINANCE LEASESFinance lease arrangements had been devised to give the lessor part of its return in capital form or for the rents to be 'back loaded'.

Both arrangements are countered in what is becoming an increasingly common way of relying upon the accounting treatment.

The tax charge will now be at least equal to the accounting profit and, additionally, capital allowances may no longer be available in the first type of arrangement.

In effect, the finance lease is treated as akin to a loan.STAMP DUTYIt has become increasingly common for taxpayers to avoid stamp duty on share transfers by using foreign currency bearer shares.

This is the 1990s version of the 'preference share trick' that was legislated against over ten years ago.

Legislation to stop this avoidance device was widely anticipated.

The proposals will also impose a 1.5% stamp duty reserve tax charge on the issue of bearer securities convertible into shares.

This may affect a much wider class of capital market transaction and, unless changed, may force some UK companies to raise capital through offshore companies.CHARITIES WITH TRADING SUBSIDIARIESCharities with subsidiary trading companies can now arrange for the subsidiary to pay up its profits within nine months of the end of the accounting period to secure a deduction for the payment.

This will avoid the trouble of paying an estimated amount during the actual accounting period to secure the deduction.TRANSFERS OF ASSETS ABROADThis anti-avoidance legislation dates back to 1936 and prevents UK residents from avoiding UK income tax by transferring their assets offshore.

The legislation is to be subject to a detailed review through a specially formed working group.

In the meantime, however, changes will be made so that the legislation applies whether or not the individual was UK resident when the transfer offshore occurred and where the purpose of the transfer is to avoid any UK direct taxation.The House of Lords will shortly consider the scope of existing legislation in Inland Revenue Commissioners v Willoughby [1995] STC 143, and the Revenue is presumably clearing the ground for reform should the case be lost.EMPLOYEE MEASURESFor many employers and employees, the withdrawal of profit-related pay over a peri od from 1998 will be unwelcome, if not unexpected.

That apart, in line with previous consultation, the rules for employee travel and subsistence allowances for site-based employees are to be relaxed so these employees will get relief for the costs of travel to and from the site at which they are working.In addition, various schemes to avoid PAYE and national insurance contributions by paying employees in the company's ordinary shares, or those of certain companies controlling the employer, are countered.

In the future, any shares under an unapproved scheme given as remuneration may attract PAYE and NICs.

This measure may affect a number of arrangements -- especially after last year's narrowing of approved schemes -- even though unrelated to the avoidance schemes.CONCLUSIONIt is no surprise that the chancellor has announced fewer measures than in recent years.

However, there will still be much to be reviewed in the Finance Bill.For the future, we have the tax legislation rewrite to look forward to.

The chancellor endorsed the tax law review committee's proposals for a special parliamentary procedure to deal with the rewrite.

It remains to be seen whether the parliamentary committee on procedure seconds his endorsement.Whether it does or not, the Bill, a new government, the 'spend-to-save' initiative and the rewrite guarantee a great deal of work for practitioners in the tax field and for the Law Society's revenue law committee.