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Are contractor accountants confused by tax avoidance policies?

Are contractor accountants confused by tax avoidance policies?

The Finance Bill (2010) has laid down specific provisions for MPs regarding tax avoidance, although one tax expert says there is no obvious reason why this should occur.

Grant Thornton’s tax director, Mike Warburton, made his comment after it emerged that section 554E (8) of the Finance Bill included a clause saying that the disguised remuneration legislation did not apply to members of the House of Commons.

The new legislation on disguised remuneration schemes such as Employer Funded Retirement Benefit Schemes and Employee Benefit Trusts is intended to stop the complex arrangements some employers have been using to avoid income tax. Warburton said he found it difficult to understand why MPs need this exemption.

A spokesman from HMRC said the Independent Parliamentary Standards Authority makes payments to MPs so that they can carry out their parliamentary responsibilities. These payments have been excluded from the new legislation because they are not tax avoidance. However, arrangements made by other third parties were not excluded from the new regulations.

The tax avoidance rules are thought by many to be too complicated and it is not clear which benefit schemes are covered by them.

The government has also closed the loophole that allowed people to avoid tax through the Qualified Registered Overseas Pensions scheme. QROPS lets people who relocate overseas to liquidate their UK pension. However, it was discovered that there was a clause in an agreement with Hong Kong that allowed people to transfer their pension there but still remain a resident of the UK. This legislation has now been changed in the Finance Bill.

Exchequer secretary, David Gauke, said the coalition has a clear strategy for combating tax avoidance and it will take action against anyone who takes unfair advantage of tax loopholes.

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Image: Family – 2011.3.10 (24/365) by loveloveshine

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