Budget 2014: Tax avoidance schemes face early payment

Money

Firms and individuals wrangling with the UK tax office over their use of tax avoidance schemes will have to pay the disputed sum to the government.

Those using the schemes will get their money back, with interest, if they win, Chancellor George Osborne has announced.

HM Revenue & Customs (HMRC) will also be able to directly seize money owed from bank accounts.

In total, the new tax rules may recoup £385m in 2015.

"While the vast majority of wealthy people pay their taxes, there is still a small minority who do not,' said Mr Osborne.

"We will now require those who have signed up to disclosed tax avoidance schemes to pay their taxes, like everyone else, up front."

The chancellor also said the government would seek to stop companies cutting their tax bill by moving money between their subsidiaries.

"These payments will be disregarded for tax purposes, and companies will pay tax on profits generated in the UK," the Budget document said.

Budget documents

Budget graphic

PDF download Download full Budget documents[2.05MB]

Most computers will open PDF documents automatically, but you may need Adobe Reader

Mr Osborne expects to recover £290m in the 2015 financial year and £1.23bn the year after by forcing those using registered tax avoidance schemes to pay disputed money to the state.

The government is trying to prevent those who HMRC thinks owe tax from entering into lengthy appeals processes to try to hold onto the money for longer, said John Cullinane, a tax partner at accountants Deloitte.

They are "trying to avoid the cashflow advantage" of allowing someone to keep disputed money, he said. If the amount is large enough, there can be considerable interest payable from keeping it for longer, he said, "if you keep appealing".

Mr Osborne also cut the threshold for companies having to pay 15% stamp duty on home purchases from £2m to £500,000.

"Many of these are empty properties held in corporate envelopes to avoid stamp duty," Mr Osborne said. "This abuse will end.''

More on This Story

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

Business Live

  1.  
    07:20: North Sea oil crisis Radio 5 live
    North Sea oil platform

    It's extremely difficult to tell if the North Sea oil business is heading into the same kind of crisis that it saw in 1986, says Aberdeen businessman Charles Skene on Radio 5 live. Kenny Anderson the boss of an Aberdeen construction firm remembers the "strife" caused in 1986 when oil fell to $36 per barrel. But predicting oil prices is an "impossible game" he points out.

     
  2.  
    07:10: Samsung shareholder payout

    Samsung Electronics is considering increasing its dividend payout this year by between 30% and 50% compared to 2013.

     
  3.  
    06:56: Nigerian currency crisis BBC Radio 4

    Phillip Walker of the Economist Intelligence Unit, tells Today the crisis facing Nigeria is far bigger than the one facing Russia. Nigeria's currency the naira has fallen 15% against the US dollar this year forcing the country's central bank to impose foreign currency trading controls. "Nigeria has a bigger population than Russia, its economy relies on oil exports more than Russia, so it's a big problem," Mr Walker says.

     
  4.  
    06:48: Gas prices BBC Radio 4

    Professor Green says energy suppliers have an eye on politics at the moment. He says Labour leader Ed Miliband's promise to freeze energy prices for 20 months if his party wins next year's election may mean suppliers will keep prices artificially high despite currently benefitting from lower gas costs.

     
  5.  
    06:34: Gas prices BBC Radio 4

    While falling oil prices have recently caught the attention of many, the cost of gas has also been coming down. That's because demand in Europe has been falling due to a relatively warm winter so far. Richard Green professor of sustainable energy business at Imperial College London tells Today we shouldn't expect lower energy bills are a result. That's because energy suppliers are selling us gas they bought at last year's prices.

     
  6.  
    06:32: Asian markets

    Asian stock markets have had a mixed session. They Nikkei 225 is up more than 2%. Hong Kong's Hang Seng is up 1.4%. Shares in Shanghai have fallen back after hitting a four-year high in early trading. The Shanghai composite is down 0.1%.

     
  7.  
    06:21: China recalculates growth
    Chinese flag

    China's economy is bigger than originally thought. The government has revised up the size of the economy in 2013 by 3.4% to 58.8 trillion yuan ($9.5 trillion). The increase was mainly accounted for by a greater contribution from the services sector. In comparison, the US economy was worth almost $17 trillion in 2013.

     
  8.  
    06:14: IAG bid for Aer Lingus Radio 5 live
    Dublin Airport

    British Airways owner, IAG is "good at integrating new airlines" says Richard Hunter, head of equities at Hargreaves Lansdown. He is explaining why IAG made a bid for Aer Lingus. The Irish airline is attractive because it has lots of landing slots at Heathrow, says Mr Hunter. IAG may also have a bit more spending power because of the lower oil price, he adds.

     
  9.  
    06:06: North Sea oil jobs Radio 5 live
    Oil worker

    North Sea oil companies are cutting wages, rather than jobs at the moment, says Alan Savage chairman of recruitment company Orion Group on Radio 5 live. For agency workers wages have already been cut by up to 20%. He says that the British oil industry is highly taxed and the "government has a lot to answer for".

     
  10.  
    06:02: Russian crisis Radio 5 live
    Russian President, Vladimir Putin

    Next year is going to be grim for the Russian economy, says Craig Botham, emerging markets economist at Schroders on Radio 5 live. The economy is likely to contract 4.5%, inflation is forecast to be betweem 11% and 12%. The rouble could keep on weakening, "it's hard to see a particular floor for the currency" Mr Botham says.

     
  11.  
    05:59: Ben Morris Business Reporter

    Do get in touch. Email bizlivepage@bbc.co.uk or tweet @bbcbusiness.

     
  12.  
    05:59: Matthew West Business Reporter

    Morning folks. The news the US Federal Reserve is in no hurry to raise interest rates boosted shares on Wall Street and in Asia to new highs. Meanwhile the Bank of Japan maintained its commitment to government bond buying at its last meeting of the year. And we'll be keeping an eye on the Russia rouble and oil price again today and there may be more on IAG's bid for Aer Lingus. Stay with us.

     

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.