Clampdown on profit transfers from UK firms
A CRACKDOWN on tax avoidance in yesterday’s Budget will extend a scheme to limit avoidance through transferring profits internationally.
Chancellor George Osborne said that HM Revenue & Customs would try to net more firms that it suspects are moving profit overseas to avoid UK tax, extending a move taken in December’s Autumn Statement.
The change comes into effect immediately, and is part of a spate of reforms implemented as the G20 and Organisation for Economic Co-operation and Development focuses on tax avoidance schemes.
“The step in the Autumn Statement applied to one type of derivative – total return swaps – but HMRC believe that UK firms are using other vehicles to move profit to overseas companies. HMRC clearly believe that there is some real avoidance there,” said Chris Sanger, head of tax policy at EY.
The Treasury describes the policy as applying to groups that use “back to back trading contracts or other arrangements with the similar effect”.
The change is expected to bring in £60m this financial year, and £80m each year between 2015 and 2017, but that this depends on how the policy changes behaviour.