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There has been some interesting pre-Budget speculation about potential changes to the employee share ownership trust regime. We know that HMRC has been concerned about some advisers pushing the boundaries of the relief and there is an ongoing consultation which discusses some of the more contentious areas, in particular the use of overseas trusts and arrangements under which the former owners retain some form of control.
This is a classic example of how it is difficult to maintain control of policy once something has been legislated – it is almost inevitable that taxpayers and their advisers will want to find inventive ways of using the new rules. We have seen it so many times – older readers will recall the way that profit-related pay developed into something which was far removed from policy makers’ original thinking.
This does lead to the question of where such boundary pushing fits into our modern world of the general anti-abuse rule (GAAR) and Professional Conduct in Relation to Taxation (PCRT). Clearly, we are a very long way from the days when ‘respectable’ firms pushed what would now be seen as artificial avoidance schemes, but there still is a place for sensible tax planning. If legislation, properly construed, does lead to planning opportunities which legislators didn’t anticipate it is not that surprising that people will want to explore them. In my view the GAAR and PCRT have been a positive development for all involved in taxation and nothing I say here should cast doubt on their importance or effectiveness. But tax planning is not dead. If the government doesn’t like the way that certain pieces of legislation are being used, the solution is to consult and then amend. That’s what’s happening here and I applaud it.
If you do one thing…
Read the new guidance in EIM23151 about the treatment of double cab pickups (tinyurl.com/hmrceim23151).
