New anti-avoidance rules could be introduced

Thursday 2 October 2014

New rules to crack down on tax avoidance will be introduced if the Conservatives are voted in during the next election.

Chancellor George Osborne announced at the annual Conservative Party conference that he would be tackling avoidance strategies used by technology companies to avoid their corporation tax liabilities in the UK.

The crackdown will largely be centred on multinational companies such as Google, Apple and others who have been found to find methods of getting around the corporation tax. In turn, this could benefit umbrella company contractors, limited companies and sole traders in the long run as it will give the government the leeway to keep taxes low.

Mr Osborne pointed out that the UK has some of the lowest business taxes in the world and it is expected that these taxes are paid.

The chancellor stated: "Some technology companies go to extraordinary lengths to pay little or no tax here. If you abuse our tax system, you abuse the trust of the British people. And my message to those companies is clear: we will put a stop to it. Low taxes, but low taxes that are paid."

Aides to the Treasury believe that the crackdown on tax avoidance will raise a few hundred million pounds but add that more information will be given during the Autumn Statement.

No companies have been singled out, however the crackdown has already gained the titled of the Google Tax. This follows on from when it was revealed in 2012 that the company had paid little in terms of corporation tax compared to the profits it had made. Google's UK boss Matt Brittin argued that companies have a duty to their shareholders to pay the minimum taxes.

The crackdown is not the only measure that Mr Osborne said he will take to make sure that taxes for businesses and employees are kept low. He also said that there will be a freeze on benefits, including Job Seekers Allowance, Income Support, Child Tax Credit and Working Tax Credit, Child Benefit and Employment Support Allowance.

Mr Osborne says that this cut is fair because benefits have increased more than pay since the recession began. His aides say that wages have increased by 14 per cent since 2007, while out of work benefits have increased by 22 per cent over the same time.

He added: "The debts that need reducing, the small businesses that need supporting, the jobless who need employing, the infrastructure that needs building, the better future for Britain that needs securing. We here resolve we will finish the job that we have started."

Through these measures, Mr Osborne promised to cut business taxes in the UK, a pledge that was welcomed by such groups as the Confederation of British Industry, the Federation of Small Businesses and the Association of Independent Professionals and the Self Employed.

Plans to tackle youth unemployment were also outlined. Mr Osborne says he intends to use the savings gained from welfare freezes to fund the creation of three million new apprenticeships.

By Victoria McDonnell

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