A number of anti-avoidance measures including anti-fragmentation rules and changes to Controlled Foreign Company rules were announced in the Budget 2018 to be enshrined in legislation in the Finance Act 2019. The ‘Tackling tax avoidance, evasion, and other forms of non-compliance’ policy document has now been updated to include the measures announced and confirm HMRC’s current approach to tax avoidance and evasion. This can be found at:
No new measures or changes were announced, however section 93 (1) of Finance Act 2019 required a review by the Chancellor of the Exchequer of the provisions within the act relating to tax avoidance within 6 months of passing the act. This review is included at Annex B in the policy document.
The review concluded that the government is confident all recent anti-avoidance measures will be effective in reducing avoidance and evasion and therefore contribute to reducing the tax gap.
The report goes on to acknowledge that many of the anti-avoidance provisions in Finance Act 2019 have not yet come into effect and for those that have, there has not been enough time elapsed for date to be available to review the effectiveness.
The report also confirms each anti-avoidance measure considered will not lead to any new tax avoidance opportunities.
We conclude that it is too early to say whether the anti-avoidance measures introduced in Finance Act 2019 will be effective or will present any new tax avoidance opportunities and that this review under section 93(1) would have been more comprehensive were it to be undertaken based on data collected in the years following Finance Act 2019.