Budget 2008 > Business > Protecting tax revenues and simplifying anti-avoidance legislation
 

Protecting tax revenues and simplifying anti-avoidance legislation

Alongside the Press Notices and Budget Notes various supplementary documents have been published. These include the papers entitled ‘Protecting Tax Revenues’ and ‘Simplifying Anti-Avoidance Legislation’.

In broad terms ‘Protecting Tax Revenues’ is HMRC’s overview of why it needs to protect tax revenue, what it has done to date and what it plans to do in the next three years. In this context, HMRC is addressing those who ‘do not readily pay the tax that they should’ whether as a result of error, artificial avoidance, evasion or fraud. It states that the Government’s approach is ‘balanced’, ‘evidence-based’, ‘comprehensive’ and ‘performance-based’. The document sets out the specific Public Service Agreement targets for HMRC for 2005-2008 and the Departmental Strategic Objectives for 2008-09 to 2010-11. In moving forward, it is stated that existing strategies are being refined and new ones developed. It is stated that key elements include:

• greater focus on taxpayer groups
• better analysis
• modernising the legal framework within which HMRC operates
• further exploiting the benefits of an integrated department
• closer working with the EU and international partners
• improving the skills available to HMRC.

The document highlights the priority for HMRC to develop further its relationship with large business to improve the UK business environment and to move forward with Small and Medium sized Enterprises (SMEs) and individuals. A progress report on HMRC’s plans to work better with SMEs has been published today.

The document also refers to the Anti-Avoidance Simplification Review.

The Anti-Avoidance Simplification Review was launched in the Pre-Budget Report 2007 and a progress report was published today. The principles which are stated to underpin the work are:

• simplification will be a priority when designing and reviewing tax policy alongside sound public finances and fairness;
• the Government will work in partnership with business to identify further opportunities to simplify the tax system
• the Government will share its finding on the viability of tax simplifications with business.

The stated priority areas are:

• ensuring new anti-avoidance legislation is clear, effective and well targeted, and
• simplifying areas of existing anti-avoidance legislation.

The document outlines the ways in which HMRC and HM Treasury have been engaging with business and provides a summary of views. The various approaches to anti-avoidance legislation from rules-based to more generic approaches are outlined and it is stated that ‘the Government will need to retain this range of approaches at its disposal’, but that generic approaches ‘appear to provide scope for simplifying existing legislation’. Various repeals have been announced (in relation to bond-washing and dividend buying; transactions in securities and employment related securities).

The specific areas for review are identified together with timetables:

An update on progress will be provided at PBR 2008.

In relation to indirect tax, consideration of the ‘option to tax’ supplies of land and property is being taken forward in the context of the VAT Simplification Review.