Andy White, senior partner at CBW, examines whether the tax authority’s latest attempts to clampdown on tax avoidance through a curb on profit fragmentation are really necessary and, more importantly, how they could fundamentally infringe upon taxpayers’ rights
There can be little doubt that the government has been extremely successful in recent years in tackling tax evasion and artificial avoidance. Most commentators would applaud their efforts in this regard. Nevertheless, it is critical that a balance be maintained between HMRC’s laudable efforts to collect the ‘right amount of tax’ on the one hand, and taxpayer rights on the other.
There can be few people who would deny that the tax statute book is already a work of byzantine complexity. Moreover, its sheer volume is daunting at best. Now we have proposals, pithily titled ‘tax avoidance involving profit fragmentation’. It will be instructive to study the results of the recently-closed consultation on this matter. But it seems to me that some aspects of the proposals are so outlandish as to require more than just a consultation response.
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