Treasury crackdown on wealthy tax dodgers saves £1.5bn
The new legislation will block the use of post-cessation trade relief being abused by wealthy individuals to reduce their tax bills.The Treasury believes it has averted a potential £1.5bn hole in the public coffers as offshore tax havens could create bogus trading companies to file fake expenditure receipts.
The trade relief scheme was set up to allow individuals and SMEs to claim a deduction in their tax bill for certain payments and bad debts arising after their trade or profession had ceased trading. A legitimate payment would be if an architect's practice had failed and legal costs had been incurred on a specific project, or a builder needed to file expenditure for repair costs. The new rules will be introduced in the 2012 Finance Bill.
Exchequer Secretary to the Treasury, David Gauke, said: "Tackling tax avoidance is a priority for the Government. It is unacceptable, at a time when we are trying to bring down the deficit, that there are those who try to avoid paying the tax they owe...we will not hesitate to close down other avoidance schemes as we become aware of them."