In the Budget Report, the Treasury expressed concern about the growing use of ‘contrived structures’ which allow investment in low-risk activities benefiting from income guarantees through subsidies from the Government. It is now attempting to exclude these kinds of investments from tax relief. A consultation will take place later in the year looking more closely at exploring options for VCT reliefs to apply where investments are in the form of convertible loans.
President of The Association of Taxation Technicians (ATT), Yvette Nunn, said: “Although the Association understands that the Budget announcement is part of a broader effort to crack down on tax avoidance, it is equally important to recognise that those schemes intended to increase investment in growing businesses must not be hampered by an over-zealous attempt to combat avoidance.
"It is a fine line between cracking down on tax avoidance and not deterring those keen to take advantage of VCTs and EISs. We must of course be mindful of anti-abuse rules but make sure that they do not diminish the desire of those willing to help small businesses to grow from doing so. In particular, the rules should not be made any more complex than they are already.
"Ideally, we would prefer any attack on perceived abuse to be made using the General Anti-Abuse Rule (GAAR) that was introduced by Finance ACT 2013. That is what it is there for.”
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Susie Hughes © Shout99 2014