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Plugging the leaks in the tax system (BBC)

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Trying to solve the UK's deficit without tackling tax evasion and artificial tax avoidance is like trying to run a bath with the plug out.


George Osborne's Autumn Statement underlined the government's commitment to reducing this leakage. Some of the new initiatives were announced two days before the statement and some earlier still.

There are a few new announcements: four targeted anti-avoidance measures to stop specific schemes to reduce corporation tax, and one to stop income tax avoidance using patent royalties.

Further down the track, there is legislation to prevent people avoiding tax by working through offshore employment services companies. More details on this, and on a general anti-abuse rule (GAAR) - a catch-all rule to fight tax abuse - are expected later in December.

Hard-hitting new measures aimed at those who sell tax avoidance arrangements are also in the pipeline, as well as stricter rules on informing HM Revenue and Customs (HMRC) about new schemes.

For the first time too, the UK tax authority can now access information from credit reference agencies and cross-match it to the earnings you have declared to the tax authority. This is a radical new way of finding out about hidden profits.

Off-payroll contracts

Concerns were raised by MPs earlier this year about the way some people were being paid through their own companies, rather than as employees, for tax purposes.

The Public Accounts Committee began its inquiries into off payroll contracts after it emerged earlier this year that the former head of the Student Loans Company was being paid via a company.

The government had proposed draconian new rules on temporary workers who take up senior positions.

However, in the small print of the Autumn Statement is the announcement that this "controlling persons" legislation has now been abandoned.

The government will instead revise the current legislation, known as IR35, to be sure that this type of tax planning is blocked.

Tax credits

It is not only the rich who are in the spotlight.