Ltd Company contractors in particular may wish to seek advice from a qualified contractor accountant in the wake of a new announcement from the Treasury. It seems that a new clampdown on tax avoidance is about to take effect.
David Gauke, the Exchequer Secretary to the Treasury, has revealed a raft of changes to the legislation, many of which will come into effect immediately. In these deficit-reducing times, the Treasury is keen to raise as much revenue as it can from every possible source – and it believes it can generate an extra £2 billion from these measures alone during the course of this parliament.
Mr Gauke explained that the rules taking immediate effect will target tax avoidance, by prohibiting groups of companies from using intra-group derivatives or loans – tactics which tend to reduce the group’s tax bill. In addition, the new measures will also tackle the practise used by some firms of not fully recognising certain sums in their accounts that involve derivatives and loans.
“Disguised remuneration” will also be tackled by the rule changes. This is a tactic whereby companies seek to minimise due tax by changing the currency they use to prepare accounts. VAT loopholes will also come under scrutiny; in particular, the practise of artificially splitting the supply of services to minimise VAT obligations will be prevented.
Many of these measures apply to larger companies and will not directly impinge on the freelance contracting community; even so, it’s as well to be aware that tax avoidance is now under the microscope and is by no means unlikely that the government will begin to scrutinise the smaller contractor with added vigilance.
Why don’t they leave us I.T. contractors alone. Thieves!