So! Budget 2014 has come and gone, and like any good party all there is to do now is deal with the aftermath! I watched the Budget through the BBC’s live stream and the tone seemed to be much lighter and more confident than in previous years, and even included a few jokes from the Chancellor.
George Osborne presented his fifth Budget against a very different economic backdrop to last year – the economy is recovering, growth forecasts have been revised upwards, interest rates are low and unemployment is falling.
This Budget has announced that some tax rates will fall (Corporation Tax, investment based Income Tax, and tax on pensions) and also the enhancement of some tax reliefs (Research & Development Tax Credits, investments in Social Enterprises, and Capital Allowances) all of which will be welcomed by most businesses, and are pretty uncontroversial.
Details of the main Budget announcements and the implications for individuals and businesses can be found here.
Budget 2014 also announced some significant additional powers for HMRC to use when tackling tax avoidance and some will see these as very controversial. Following consultation where an individual or business taxpayer has utilised a “tax scheme” covered by specific disclosure legislation (so, for example, the schemes you will have read about in the press used by some high profile celebrities) or a scheme counteracted by the new General Anti-Abuse Rule (GAAR), HMRC will have the power to demand taxpayers to pay the disputed tax upfront. In short, the taxpayer will have to pay more tax than they consider is legally owed and then enter into discussions with HMRC to get it back.
HMRC believes that they will be able to use these powers in relation to 65,000 ongoing cases, which will be of significant concern to those with ongoing enquiries into such arrangements.
Some will see these new powers as a change to the nature of law, in that you could argue the taxpayer is being treated as guilty until proven innocent. Others will of course welcome the news as protecting Government revenues from ultra-aggressive scheme providers.
Whichever camp you fall into (or indeed if your opinion is somewhere between the two) I’m certain we will hear plenty more on this.
