Treasury quashes overseas tax avoidance scheme

Accountants may be interested to read that the Treasury has quashed a tax avoidance scheme that exploited Manufactured Overseas Dividends.

The Treasury identified that the scheme could have allowed companies to offset or reclaim income tax that had not been paid; a situation that could have lead to a significant loss of revenue for the government.

Exchequer secretary to the Treasury, David Gauke, said it was imperative that everybody pays the correct tax and the government has acted quickly to close this loophole. Furthermore, the Treasury will be quick to close down any other tax avoidance schemes as soon as it becomes aware of them.

Meanwhile, pensioners might be concerned to learn that the government has been calculating how much income it could raise if National Insurance was levied on pensions.

The charity Age UK has suggested that charging pensioners NI would be a possible way of funding care for the elderly.

Mark Hoban, the financial secretary to the Treasury, revealed that £500 million could be raised this year from pensioners. The figure was based on the Survey of Personal Incomes 2007-08 and the OBR’s economic assumptions. It also took into consideration behavioural changes.

Hoban made his statement on September 9th in response to a parliamentary question asked by Penny Mordaunt, a Tory MP.

Pensioners may well feel aggrieved if they have to pay NI on their pensions. After all, the majority of them have been paying National Insurance and pension contributions in order to guarantee an income on retirement.

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