Promoters welsh on IR tax deal
UK bankers depressed by the size of their last bonus should stop reading now. The news gets worse.
In May, chancellor Gordon Brown and the Inland Revenue stepped up their two-pronged attack on City firms whose workers dodge paying tax at the higher rate of 40% on their bonuses.
After closing tax law loopholes last year, the Inland Revenue has now published its Tax Avoidance Schemes (Information) Regulations 2004, which come into force on August 1.
The regulations require promoters of tax-avoidance schemes to give the Inland Revenue a summary of the scheme within five days of them becoming aware that a client is using it.
The promoters are the bankers, lawyers and accountants who advise on bonus planning. Once notified, the Inland Revenue gives each scheme an identification number that bankers paid a bonus under it put on their tax returns.
?Historically, the Revenue has played catch-up with the City,? says David Tuch, an executive compensation consultant at law firm Lovells. ?Promoters are very widely defined, and notification will give them the chance to legislate against a specific scheme and close it down much sooner.?
So is it bye-bye low-tax bonuses? ?The chancellor might have killed off aggressive tax planning for bonuses,? says Tuch.