Finance Bill 2014: Measures with Immediate Effect

Treasury written statement – made on 5th December 2013.

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Photo of David Gauke David Gauke The Exchequer Secretary

This Government are committed to delivering a tax system that is fair and promotes growth and competitiveness.

The Government are today announcing measures to help tackle tax avoidance and support investment. The legislation for these measures will have effect from today and will be included in Finance Bill 2014.

Debt cap

The Government are introducing legislation to counter the potential exploitation of the worldwide debt cap by putting beyond doubt the way the grouping rules apply to companies without share capital.

Controlled foreign companies: profit shifting

The Government are introducing legislation to switch off the full and partial exemption rules for loan relationship credits of a controlled foreign company that arise from an arrangement with a main purpose of transferring profits from existing intra-group lending out of the UK. The measure also amends the anti-avoidance rule relating to the transfer of external debt to the UK.

Partnerships review

The Government are introducing anti-forestalling rules to prevent avoidance of legislation concerning partnerships that include both individual and non-individual partners—mixed membership partnerships. The substantive legislation on mixed membership partnerships will have effect from 6 April 2014, but the anti-forestalling rules apply from 5 December 2013.

Avoidance scheme using total return swaps

The Government are introducing legislation to counter tax avoidance schemes that use derivatives to reduce a company’s liability to corporation tax, including, but not limited to, arrangements involving total return swaps.

Double taxation relief: revenue protection

The Government are introducing legislation making two changes that reinforce the UK’s double taxation relief policy that relief for foreign tax should only be given where income has been doubly taxed: once in the UK and once in the foreign territory. One change closes avoidance opportunities by strengthening the provision which ensures that tax credit in the UK is reduced if foreign tax is repaid by a tax authority to a person other than the person entitled to the credit. The second change prevents any avoidance opportunities which seek to exploit mismatches between the UK’s rules and the rules of foreign jurisdictions where a disproportionate amount of UK tax relief is claimed in respect of foreign tax in relation to non-trading loan relationships.

Further details on the measures listed above are contained in the draft legislation, explanatory notes and tax information and impact notes published on the gov.uk website.