|Artificial loss relief - tax avoidance scheme closed down
The Government has announced that legislation is to be introduced, effective from 21 December 2012, to target a tax avoidance scheme. The scheme seeks to exploit the rules in relation to a property business by generating artificial loss relief for use by companies to reduce their Corporation Tax profits. Whilst the Government and HMRC do not accept that the scheme has the intended effect, the decision to block the use of such an arrangement will ensure that tax revenues amounting to tens of millions of pounds will be protected.
The relevant legislation will be included in Finance Bill 2013 (and backdated to 21 December 2012).
Announcing the new legislation, the Exchequer Secretary David Gauke said:
'This Government has made it very clear that we will not put up with tax avoidance which uses artificial structures to aggressively exploit rules contrary to Parliament’s intended purpose. Within days of HMRC being notified of the existence of this scheme we took decisive steps to shut it down once and for all.'