LONDON: U.K. government has launched a public consultation on plans to tackle tax avoidance arrangements that designate earnings of U.K. residents to trusts and companies in low or no tax jurisdictions.
While Her Majesty’s Revenue and Customs said it had succeeded in challenging some of the so-called “profit fragmentation” schemes and in recovering a significant amount of tax, the required resources are considerable, and the process can take years to resolve.
“The government therefore proposes to introduce legislation to target these schemes directly and to remove any cash flow advantages for users of the arrangements,” the public consultation document states.
The schemes involve skilled individuals, for example entertainers or asset managers, whose profits from earnings are moved to an offshore company that is often owned by an offshore trust.
