Two New Clauses to block potential tax avoidance, amending Schedule 29 of the Finance Act 2002 and section 102 Finance Act 1986 respectively, are to be introduced at Report Stage of the Finance Bill. The changes will have immediate effect.CORPORATION TAXThe amendments to be introduced counter tax avoidance schemes by companies attempting to exploit a perceived mismatch between the definition of a related party in the new intangibles rules, introduced in Schedule 29 of Finance Act 2002, and the definition of a group for capital gains tax purposes. These schemes aim to bring assets existing before 1 April 2002 into the new regime.INHERITANCE TAX (IHT)There are special IHT rules to prevent tax avoidance through gifts where the donor does not truly give up the gifted assets. The proposed changes tighten up these rules following the Court of Appeal's decision in the recent case of "Eversden", so that in future gifts into trust may be chargeable even though the trust initially gives an interest in possession to the donor's spouse. The new provisions will apply to gifts made on or after today.
Clauses to give effect to these proposals are being tabled today. Further details (including the text of the clauses and explanatory notes to them) are given in an Inland Revenue news release issued today.