HMRC Consultation outcome: Tax avoidance involving profit fragmentation
Released 6 July 2018
HMRC have published responses to the consultation on proposals to tackle avoidance schemes to move profits of trades or professions outside the UK tax charge.
On 10 April 2018 the Government published a consultation document on proposed rules to tackle tax avoidance involving fragmentation of business profits. The targeted arrangements typically involve some or all of the profits of a UK business being moved to an offshore entity where nil or very little tax is paid - this is often an offshore company owned by an offshore trust. The Government proposes to introduce new legislation to tackle tax avoidance involving fragmentation of business profits. The changes will add to current rules, providing legislation that will specifically target this type of avoidance. Draft legislation is published alongside this response document and following a period of further technical consultation on the legislation, the changes will be finalised for Finance Bill 2018-19 and are planned to come into effect from April 2019.