New far-reaching UK government rules aimed at trapping tax cheats are forcing wealth managers to pull the plug on special schemes to avoid taxes.
Chancellor George Osborne launched an attack on tax avoidance in his March Budget 2012 by announcing plans for a general anti-abuse rule (GAAR).
A team off tax experts is reviewing UK tax laws to frame new legislation that will spell out the obligations for taxpayers to play by the rules.
The announcement triggered a review of tax management schemes aimed at minimising the amount of tax high net worth expats and UK residents pay, as the rule will require the schemes to be logged with HM Revenue & Customs in advance of clients buying in to the advice.
One of the first high profile casualties of the government’s GAAR policy is international wealth adviser RSM Tenon.
The firm has suspended all products offered via a specialist tax hotline.
RSM Tenon said halting the service would have little impact on earnings.
“Following the announcement of a general anti-avoidance rule in the recent UK government budget, we have decided not to offer further new products through our specialist tax service line,” said a statement from the firm.
‘While this will have limited impact on revenues in this financial year as these had substantially been earned prior to the budget statement, we will not earn revenues in this service line going forward.”
A report by Graham Aaronson QC was published in November 2011 recommending the government that GAAR targetting artificial and abusive tax avoidance schemes would improve the UK’s ability to tackle tax avoidance.
The Chancellor proposes to include GAAR in the Finance Bill 2013.
By indicating his intentions, Osborne is giving firms and clients tied up in schemes that may contravene GAAR rules time to unravel their tax affairs.