Tax Avoidance guide leaves freelancers no excuse but to comply

Fresh tax avoidance guidelines have been launched by the Inland Revenue to provide a 'certainty' for freelancers and small businesses unsure about August 1st legislation, governing disclosure rules.

The Revenue has said clarifying disclosure rules on in-house and external financial instruments will provide a swifter response from authorities and a better system for its genuine taxpayers.

It added that the aim of the help guide is to deter "contrived and artificial schemes whose main purpose is to avoid tax" - by clearly showing the steps required for compliance.

The brief includes last-minute concessions by the government that lists approved or irrelevant financial exchanges while also extending promoter deadline to September 30 - covered here by CUK.

The small print reveals taxpayers must provide details where the scheme or arrangement from a promoter is based offshore and when the individual has chosen to devise the model internally or by himself.

It says the Revenue demands to see "sufficient detail" of the scheme, including its aims, overall operation, necessary steps taken and the tax law it relies upon.

Mike Warburton, senior partner at accountants, Grant Thornton, said: "There is still a degree of confusion over what qualifies as a scheme. There will be a lot of suck-it and see to see how the regime will be applied."

He added that the taxman would potentially end up swamped with irrelevant and time-consuming applications when only seeking to expel a narrow margin of avoidance programmes.

"What they are after is a couple of dozen schemes they want shut down, and they are going to have to sift through thousands of submissions to do so."

Yet the Government insists that the fresh publication on disclosure rules will make it easier for the vast majority complying - and harder for the smaller proportion ducking their tax obligations.

Paymaster General, Dawn Primarolo, said that consultation with business groups and tax advisers confirms both communities seek greater certainty when dealing with employment and financial restrictions, imposed by authorities.

"Today's guidelines have been developed in consultation with business and tax advisers and will make it easier for them to comply with the new rules," she said.

"The disclosure rules are a vital part of the battle against tax avoidance. They will help stop the small minority of individuals and businesses who abuse the tax system, at the expense of those who pay for their fare share."

The rules are to be policed by IR Avoidance Intelligence Units - specialist tax avoidance teams, "real time monitoring the avoidance industry," for a closer guard on those forgetting to declare - or choosing to openly avoid.

Chas Roy-Chowdhury, Director of Tax at the Association of Certified Chartered Accountants, reflected: "If the rules were thought through, they could have been issued with the Budget. The reality is that they're not very interested in consulting, but in telling us, these are the rules."

To read the new guidance on disclosing tax avoidance please visit:


3rd August 2004

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