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Home > Regulation > UK Regulation

By Marc Shoffman | Published Apr 25, 2012

‘Action on anti-tax avoidance schemes must be justified’

A report by the Treasury select committee warned that retrospective legislation should be used only in “wholly exceptional circumstances”.

The report, which followed an inquiry in to the 2012 Budget, said: “We recommend that the government restricts its use of retrospective legislation to wholly exceptional circumstances which should be narrow and clearly defined.

“The Treasury should set these out as soon as possible for consultation, along with an explanation of how gradual further extension of retrospection can be prevented.

“Any future retrospective tax measure must be justified against the agreed criteria. Such justification must include clear explanatory statements to parliament by the responsible minister and should invite views from relevant professional bodies.”

The committee said the retrospective legislation could apply to schemes such as a general anti-avoidance rule and stamp duty avoidance schemes.

The report backed proposals to introduced personalised tax statements but said there should be an assessment of the effectiveness of a 45p tax rate. It also questioned why the government removed age-related allowances while they were still being assessed by the Office of Tax Simplification.

It said: “Although described as a simplification, the phasing out of age-related allowances also represents a revenue increase to the government of £360m in 2013/2014, rising to £1.2bn in 2016/2017.

Jason Witcombe, director of London-based Evolve Financial Planning, said: “You can understand why a government would want to introduce retrospective taxation on any form of loopholes. There will always be a bright spark who finds the next wheeze.

“A better approach would be to come down harder on the firms promoting these avoidance schemes.”

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