47881_Budget_2015_Web_Accessible

Avoidance1.243 This government has introduced changes throughout this Parliament to tackle avoidanceand to focus in on the diminishing minority who refuse to play by the rules. As proposed inthe consultation document ‘Strengthening Sanctions for Tax Avoidance,’ the governmentwill introduce tougher measures for those who persistently enter into tax avoidanceschemes that fail, and will develop further measures to publish the names of suchavoiders and to tackle avoiders who repeatedly abuse reliefs. 106 The government willalso widen the current scope of the Promoters of Tax Avoidance Schemes regime bybringing in promoters whose schemes are regularly defeated by HMRC.1.244 The government introduced a significant new regime for avoidance with the creation ofthe general anti-abuse rule (GAAR). The government will increase the deterrent effect byintroducing a penalty based on the amount of tax that is tackled by the GAAR.1.245 The government changed the economics of tax avoidance with the introduction ofthe Accelerated Payments regime, removing the cash-flow advantage that users of avoidanceschemes have benefitted from. HMRC has continued to review cases and moreaccelerated payment notices will now be issued than previously announced.1.246 Some companies enter into contrived arrangements, with little economic substance,to convert old losses into new ones and circumvent the loss relief rules. The governmentwill introduce a targeted anti-avoidance rule to level the playing field between themajority of companies, who follow the rules, and those others who side step them.Ensuring a fair contribution from business and individualsBanking1.247 This government has been clear that banks should make an additional contributionthat reflects the risks they pose to the UK economy. This contribution has always needed to bebalanced against financial stability considerations and banks’ ability to lend to the real economy.However, with banks now strengthening their balance sheets and returning to profitability,the government believes that the sector should be expected to absorb a greater burden ofremaining deficit reduction. The government will therefore increase the Bank Levy from0.156% to 0.210% from 1 April 2015.1.248 Companies are currently entitled to deduct the costs of compensation payments incalculating their profits liable to corporation tax. The government believes that it is unacceptablethat banks’ corporation tax receipts continue to be depressed by compensation associatedwith widespread misconduct in the sector. The government therefore intends to makethese compensation payments non-deductible for corporation tax purposes throughlegislation in a future Finance Bill.1.249 The government will no longer allow businesses to take account of foreignbranches when calculating how much VAT on overhead costs they can reclaim in theUnited Kingdom. Under the current system businesses could manipulate their deductions. Thismeasure prevents that and will ensure that all businesses in the United Kingdom pay their fairshare of VAT.Umbrella companies and employment intermediaries1.250 Autumn Statement 2014 announced that the government would review the growing useof overarching contracts of employment that allow some temporary workers and their employersto benefit from tax relief for home-to-work travel expenses, relief not generally available to otherworkers. This is unfair. As a result of the review, the government will change the rules to106Strengthening sanctions for tax avoidance, HMRC, January 2015.Budget 201561