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Finance Bill: government amendments to ‘disguised remuneration’ provisions

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The government has tabled dozens of amendments to Finance Bill provisions on ‘disguised remuneration’ that have been severely criticised by tax professionals.

Deloitte said the ‘significant and mostly welcome’ amendments to Schedule 2 will further restrict the scope of the original proposals.

The Chartered Institute of Taxation had warned that while amendments to the initial draft published last December allayed some concerns, the Finance Bill provisions published on 31 March were ‘far too complex’.

The rules ‘remain very widely drafted and the new exclusions are intricate and heavily qualified, running to nearly 60 pages compared with the original 25,’ the CIOT said in a submission prepared last month.

One of a number of ‘tax avoidance tests’ effectively introduced a general anti-avoidance rule for employment taxes, it claimed. ‘Whilst we fully appreciate the government’s objective in wanting to rein in avoidance around EBTs and to contain tax leakage concerning alternatives to registered pensions, we remain unconvinced that the present legislation represents a practical and proportionate way of going about this.’

Colin Ben-Nathan, Chairman of the CIOT’s Employment Taxes Sub-Committee, said: ‘We support the government in tackling tax avoidance involving rewards paid via third parties but we think the legislation in the Finance Bill is far too complicated and risks creating problems as well as solving them.’

Helen Lethaby, Tax Partner at Freshfields Bruckhaus Deringer, said HMRC’s ‘determination to stick with a “tax everything, untax by exemptions” approach’ had resulted in ‘a hugely complex set of rules’. Writing in Tax Journal on 22 April, she claimed that the rules ‘remain a major blot on the government’s desire to create a clear, business-friendly tax regime’.

A Public Bill Committee will resume its consideration of the Finance Bill tomorrow.