• Service: Tax, Global Indirect Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 7/12/2013

United Kingdom - Anti-avoidance measures in loan, derivative proposed amendments 

July 12:  The UK government has proposed to amend the corporate tax rules concerning corporate debt / loan relationships and derivative contracts—and has proposed to approach anti-avoidance in the following manner:
  • Reduce the scope for avoidance by making it easier to adjust accounting entries based on contrived avoidance arrangements
  • Introduce a targeted tax avoidance rule (TAAR) that would cover the loan relationships and derivative contracts regimes together
  • Modify the unallowable purpose rule to improve its effectiveness as a counter to tax avoidance arrangements by dealing with perceived uncertainties regarding the application of the rule and broadening its scope
  • Continue to adjust accounting debits and credits when they do not reflect arm’s length transactions
  • Supplement anti-avoidance rules with the GAAR

Also covered in the KPMG report are discussions of the following topics:

  • Consultation on close company loans
  • Cross-border group relief - EC action against the UK
  • Restrictions on interim payments in proceedings relating to taxation matters
  • Employee share ownership - guidance on tax issues, model trust deed and other documentation
  • Consultation - supporting indirect employee ownership structures
  • VAT - Recent HM Revenue & Customs briefs
  • Government moves to ban consultancy charging in auto-enrolment pension plans

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