2020 Spring Budget Anti Avoidance
The following is a summary of 2020 Spring Budget in relation to Anti Avoidance.
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Stamp Duty: Extension of Market Value Rule
Transfers of unlisted securities to connected companies will be deemed to transfer at market value for stamp duty purposes where the consideration for the transfer is the issue of shares as part of a contrived arrangement to avoid tax. Currently the market value rule only applies to listed securities. This measure will take effect from the date that it receives royal assent.
HMRC Priority in Insolvency
From 1 December 2020, when a business enters insolvency proceedings HMRC will be a secondary preferential creditor in respect of VAT and PAYE and will be paid before unsecured creditors. This measure was previously announced but has now been delayed and extended to Northern Ireland.
Business groups have described this policy as a threat to business lending and business rescue. The is primarily because HMRC will now be repaid in advance of ‘floating charge’ lenders which understandably may limit the availability of this type of finance in future.
Construction Industry – Avoidance, Evasion and Non-Compliance
The Government have announced plans to introduce legislation to:
- Allow HMRC to deny tax refunds by non-compliant businesses claiming CIS credit to which they are not entitled,
- Simplify rules for deemed contractors,
- Clarify the rules on allowable deductions for materials, and
- Expand the scope of penalty for false information supplied when registering for CIS.
They will also publish a consultation on how to tackle fraud in the supply chain.
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