Heading for the crackdown

10 June 2005 By Simon Nixon

Nobody objects to a clampdown on some of the more egregious abuses. But many of its proposals are badly drafted and poorly thought out. Clearly the government needs the money. But the tax system depends upon clear rules consistently applied. That is now under threat.

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The UK government has introduced a number of measures to clamp down on tax avoidance in the Finance Bill currently before parliament. Many of these proposals were first introduced in the budget in March, but the government was forced to abandon many of them ahead of the general election in May after the Conservative party demanded that parliament was given more time to debate the changes.

Among the more controversial measures are changes to the rules governing transfer pricing for private equity investors, a clampdown on cross border tax arbitrage and new rules on the tax treatment of preference shares.

Earlier this month, a group of US business leaders wrote to US Treasury secretary John Snow asking him to lobby the UK government over changes to the treatment of crossborder tax allowances.

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