Bad news for all those taxpayers that are still happy to use promoted tax schemes to avoid tax. All schemes with a requirement to notify under the DOTAS regulations are to be counteracted under the General Anti-Abuse Rule (GAAR).
This means that for any investments in such schemes on or after royal assent being given to finance bill 2014 any tax savings will have to be paid upfront and the benefit will only be realised after successful defence through the tribunal system.
Given that there are disputes arising from previous schemes still being processed up to six or seven years after investment this is likely to be a major stumbling block to future investment.
More Bad news, but most likely to affect individuals. The Chancellor managed to gloss over perhaps the most important point it what was really quite a tame budget overall. He said “ we will give HMRC modern powers to collect debts from bank accounts of people who can afford to pay but have repeatedly refused to, like most other Western countries”. This may be Big Brother at its worst! We understand that these powers may extend to savings accounts such as ISA’s as well as current accounts.
We have yet to hear how the government can make this work because for a start they would need to know bank details of all taxpayers. There would clearly need to be some constraints on powers of collection to make sure families aren’t left without funds for household expenditure etc.
Most people may feel that such measures are perfectly reasonable after all most employed taxpayers have their tax taken directly from their wages so why should the wealthy be able to delay paying what they owe to HMRC?
Unfortunately, these powers may have a bigger impact on the likes of small businesses operating on a self employed basis or through a partnership. Quite often for these people cash flow constraints of running their own business mean that they are unable to pay their tax on time.