Tax Avoidance/ Evasion: On Wednesday George Osborne, UK chancellor, proposed new rules in his Budget 2014 statement to reduce the opportunities for rich individuals and companies to avoid or evade personal and corporate taxes. Also this week, two prominent US senators wrote to the Justice Department to seek extradition of about 30 Swiss bankers and others who are charged with enabling offshore tax evasion and have not appeared in federal courts.
The UK chancellor of the exchequer told the House of Commons that individuals and companies involved in legal disputes over tax-avoidance schemes will have to pay their disputed bills in advance - - a measure that is expected to boost revenues by £4bn in coming years.
HMRC (Her Majesty's Revenue and Customs) estimates that there are about 65,000 tax avoidance scheme cases outstanding and the tax authority has a win rate of around 80% of all avoidance cases it takes to court.
"It will fundamentally reduce the incentive to engage in tax avoidance in the
future," Osborne said of the new rule, which will take effect in July and will
The chancellor is also targeting wealthy foreigners who use companies to buy residential properties in the UK, to avoid paying stamp duty.
A 15% stamp duty tax on residential properties worth over £500,000 that are purchased through companies applied from Thursday.
"Many of these are empty properties held in corporate envelopes to avoid stamp duty," Osborne said.
He also proposed a clampdown on companies using complex derivatives to shift corporate profits from one subsidiary of their group to another.
However, he said he would await the results of the OECD's project on devising new international corporate tax rules, before making significant changes in this area.
Last month a former UBS AG banker pleaded guilty to conspiring to defraud the
United States by helping wealthy Americans evade taxes.
A plea agreement, which provided for continuing cooperation with investigators, included a recommendation that Lack be sentenced to five years’ probation.
Raoul Weil, the 54-year old former head of wealth management at UBS, who was arrested in Italy last October on foot of a US extradition warrant and extradited to the United States in December, is due to face a charge of conspiracy to commit tax fraud. His trial is set for next October.
In 2009, UBS, Switzerland's biggest bank, was fined $780m by the US after admitting it helped Americans evade taxes. It also gave names to US authorities with the agreement of the Swiss government - - this was the first serious breach by Switzerland of its 1934 bank secrecy law that legalised tax evasion.
US senators Carl Levin and John McCain this week urged the Department of Justice (DoJ) to seek extradition of about 30 Swiss bankers and others who are charged with enabling offshore tax evasion and have not appeared in federal courts.
In a letter published on Tuesday to James Cole, deputy attorney general, Levin and McCain say that the department should “at least attempt to use” powers under an extradition treaty with the Swiss.
The letter points to Cole’s testimony that dozens of Swiss bankers and
financial advisors have avoided trial on US charges related to tax evasion. Cole
testified that the DoJ has not sought their extradition
because the Swiss government would refuse.
Credit Suisse, the second-biggest Swiss bank
after UBS, is one of 14 Swiss banks that is currently under criminal investigation in the US.
The DoJ has also charged 70 Americans for tax evasion from the 4,450 names of evaders provided by UBS.
The bank had 17,000 American clients and the IRS (Internal Revenue Service) gave a choice of voluntary disclosure or the risk of facing a trial.
Selection of Finfacts tax reports 2013/14:
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