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Comment: Government acts quickly to avoid degrouping debacle
The Government has brought forward an amendment to Clause 31 to the Finance Bill. The change will limit the new degrouping anti-avoidance rule which the Government announced on Budget day to cases where the original degrouping event was part of a tax avoidance scheme.
As we mentioned in an earlier comment, in its original form, this new anti-avoidance rule risked jeopardizing many commercial transactions, in particular demergers and joint ventures. After some hasty consultation by HMRC, the Government is bringing forward an amendment which should allow those transactions to proceed unimpeded whilst retaining the purpose of the original rule. It is possible to ask why the clause was not subject to some form of consultation in the first place. But HMRC has, at least, listened to the issues raised by taxpayers and their advisers and acted quickly to address them.
Now what about those disguised remuneration rules?
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16 May 2011
Author: Ashley Greenbank
