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UK Announces Anti Avoidance Measures

Friday, December 17, 2010

The UK government has announced a number of proposals in its draft Finance Bill to tackle tax avoidance, particularly in relation to intra-group transactions, their financial reporting, and inheritance taxation.

Under the plans, from April, families seeking to mitigate an inheritance tax bill through the use of trusts have been warned by the UK tax authority, HM Revenue and Customs (HMRC), that they will be required to disclose such structures to allow the Authority to scrutinize their compliance with UK tax law. HMRC has said that greater access to pertinent information would enable it to assess the level of IHT avoidance, and introduce ‘counter arrangements’ to ensure that taxpayers operate within the ‘spirit’ of the law. The move has been seen by many as a precursor to the introduction of prohibitive rules that will significantly restrict UK taxpayers’ ability to implement tax efficient arrangements for their beneficiaries.

Under the April rule change it has been disclosed that HMRC will not automatically notify the promoter that has made the disclosure of whether the proposed scheme will be shut down, instead requiring that they ask whether it will be deemed unlawful.

There will be no retrospective requirement to disclose existing schemes; penalties however will be handed down to promoters of new schemes subsequent to the law change if they are not punctually disclosed.

The second measure, that has yet to be adopted, is the proposed introduction of a General Anti-Avoidance Rule (GAAR), discussions on which are ongoing. The government has highlighted its intention to tackle groups of companies and multinationals that use tax mitigating techniques to slash their tax liability. In particular, the Treasury told the Financial Times that it plans to adjust existing legislation to better target companies whose balance sheets fail to fully recognize “amounts that are taxable under rules on loan relationships and derivative contracts,” and also to tackle the manipulation of currency fluctuations in companies’ financial reporting.

According to the Financial Times, a commercial tax lawyer, Graham Aaronson is to lead a study on the introduction of a general rule, a report on the findings of which is expected on October 31, 2011. Heeding companies’ concerns about the measure, the Treasury has confirmed that the government would not introduce a GAAR before formal consultation had taken place.

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Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




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