Tax Treaties Anti-Avoidance legislation

N.B. On 9 September 2011 the Government announced that in view of concerns raised it has “decided not to proceed further with the consultation on the proposed legislation and will not include it in Finance Bill 2012.”

The recent announcement of the agreement between Swiss and UK authorities in respect of taxation on investments held within Switzerland has added a fresh dimension to international taxation advice. By coincidence, the UK is currently half way through a consultation period in respect of anti-avoidance legislation in respect of tax treaties. This consultation was issued by HMRC on 1 August 2011 and is due to close on 22 September 2011*.

The aim of the consultation is twofold. Firstly, to ensure that UK citizens and businesses can trade overseas without encountering the obstacle of double taxation and secondly to ensure that taxpayers do not avoid tax by exploiting differing international regulations. This includes both avoidance by UK residents and “treaty-shopping” by non UK citizens.

At present the UK has some 120 bilateral tax agreements. This fresh legislation has been deemed to be necessary in view of the perceived continued exploitation by British tax payers of these agreements. The legislation was announced in the March 2011 budget and is intended to apply to all income arising or chargeable gains made on or after the date of royal Assent to the Finance Bill 2012. This could effectively make the legislation retrospective in respect of existing schemes.

The consultation asks for comments in respect of the draft legislation together with the proposed tests to be applied in respect of the legislation. In particular, HMRC would welcome comments on any unintended consequences in respect of the legislation. This is therefore the ideal time to review any current international taxation arrangements in the light of the proposed legislation.

As tax mitigation specialists Newshams are able to give advice on how double taxation tax may affect any private or business transaction and how to put in place an effective international taxation strategy.

Contact us now on 020 7470 8820 and ask to speak to a tax adviser about how we can reduce your international transaction tax costs or e-mail us at and we’ll get straight back to you.

02 September 2011

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