In each of the first three months of 2012, HM Treasury announced a specific new measure to tackle tax avoidance. The moves are all incorporated in the 2012 Finance Bill, published after the Budget at the end of March. In the bill, tackling over £1bn of tax avoidance and evasion is one of the five major areas of legislation.

Each month’s announcement of a new measure was accompanied by a statement from David Gauke MP, Exchequer Secretary to the Treasury. Not a well known politician in the public domain, David Gauke clearly has a lead Treasury role in the field of policing the tax system.

In January 2012, the Government announced the introduction of new legislation to block a tax avoidance scheme involving post-cessation trade relief, which allowed a person to claim a deduction in their income tax calculation for certain payments and bad debts arising after a trade, profession or vocation had ceased.

In February, the Government announced steps to close two aggressive tax avoidance schemes recently disclosed to HM Revenue & Customs (HMRC) by a bank. The schemes, both of which are highly abusive, were designed to work around legislation that had been introduced in the past to block similar attempts at tax avoidance.

David Gauke said: “The Government wants to ensure that the tax system is fair for all and we will not allow those who seek to benefit from this aggressive avoidance to get an unfair advantage.

“We do not take today’s action lightly, but the potential tax loss from this scheme and the history of previous abuse in this area mean that this is a circumstance where the decision to change the law with full retrospective effect is justified. The Government is committed to creating a competitive tax system and we have brought in a range of corporate tax reforms, but we are absolutely clear that business must pay the tax they owe when they owe it.”

In March the Government acted to shut down a contrived and aggressive income tax avoidance scheme involving property business loss relief, and David Gauke said: “At a time when our top economic priority is reducing the deficit, it is unacceptable for anyone to try to avoid paying a fair share. Today’s action will not affect legitimate agricultural businesses, but by acting swiftly, the Government has prevented this scheme being used by people who want to escape paying the tax they owe. We won’t hesitate to close other avoidance schemes down as we become aware of them.”

At the end of March, when the Government published the Finance Bill, enacting tax measures previously announced, David Gauke had this to say: “This year’s Finance Bill shows just how committed the coalition Government is to rewarding work, simplifying the tax system and tackling the nation’s debts. The measures in this Bill will create a tax system which supports a strong economy and promotes a fair society. In other words, a tax system that works for Britain”.

Can we now expect further monthly announcements throughout the remainder of 2012, from David Gauke MP, accompanying yet more measures to close tax avoidance loopholes or to scupper tax avoidance schemes? The monthly message seems consistent, but can the Treasury provide the ammunition to support the political rhetoric?

Do feel free to get in touch with us directly if you have any questions around this topic.

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