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HM Revenue & Customs' (HMRC) crusade against tax avoidance continued last week with the publication of a consultation document 'High-risk areas of the tax code: Relief for income tax losses'. HMRC alleges that "loss reliefs that can be used to reduce or eliminate tax on general income or capital gains have regularly been used for tax avoidance purposes." Pausing there for a moment, it would be interesting to know the number of 'offenders' in, say, 2010-11, and their proportion expressed as a percentage of the UK taxpaying population, just to establish some kind of perspective here.

HMRC is considering ways of "...deterring taxpayers from entering into tax avoidance arrangements intended to exploit these loss reliefs", and is seeking views on how to deal with the perceived problem in a way that is "proportionate and strikes a reasonable balance between fairness, certainty and simplicity."

The consultation document points out that a number of anti-avoidance provisions already exist to restrict or deny this 'sideways' loss relief. However, it appears that there will soon be more legislation.

HMRC wants to ensure that everyone pays "the right amount of tax" (whatever that means). Fair enough. However, it seems to me that the Government's and HMRC's focus on tax avoidance is starting to become unhealthily obsessive. This is resulting in anti-avoidance legislation which is excessive, disproportionate and too widely drafted. The so-called 'disguised remuneration' rules (or 'Employment income provided through third parties') to be introduced in Finance Act 2011 are a prime example. Surely this aggressive policy cannot continue for much longer?

A tax Judge once commented that HMRC would have everyone on PAYE if they had the chance. I certainly know what he means.

The above consultation document can be accessed via the HMRC website.

Best wishes,

Mark McLaughlin

Managing Editor