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Tackling tax avoidance is good but what about tax evasion?

Tackling tax avoidance is good but what about tax evasion?

Contractor accountants may be interested to learn that the coalition has decided to adopt a more novel approach to tax avoidance.

The Treasury released their “Tackling Tax Avoidance” paper last week and it won quick approval from the CIoT. The Institute has been campaigning for changes to the government’s stance on retrospective tax changes for some time and is delighted that the retrospective approach has finally been dropped.

Vincent Oratore, the president of the CIoT, was delighted that the organisation’s concerns had been listened to and said SMEs and contractors will welcome this new approach as it provides them with greater certainty.

Wealthy individuals who have been able to cut down on the amount of stamp duty paid on expensive residential properties will find that loophole now closed to them. In the past, millionaires have been able to set up a company and make it the legal owner of their mansion thus avoiding a large portion of stamp duty. The Treasury estimates it will rake in an additional £30 million every year by putting a stop to this practice.

The government has now made three property related schemes illegal. Two involved buying a property through a financial institution and the third involved taking a long-term lease, of anything up to 999 years on a property, rather than buying it outright.

George Osborne also intends to raise a further £750 million by clamping down on disguised remuneration schemes.

Whilst it is understandable that the government wants to tackle tax avoidance, experts claim that tax evasion and other criminal activity have a much greater impact than legal avoidance.

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Image: New Feet and jeep by psiaki

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