The UK government today opened a consultation on a proposal, announced in Autumn Budget 2017, to shut down tax avoidance schemes involving UK traders and professionals using a device called “profit fragmentation.”
The government aims to draft legislation that puts an end to arrangements where some or all of the profits, derived directly or indirectly, from an individual’s earning capacity are moved to an offshore vehicle where no or very little tax is paid.
Commonly, the profits are moved to an offshore company owned by an offshore trust, the government said.
The new legislation, which will be designed to take effect in April 2019, would subject these profits to tax in the UK.
The legislation would also require government notification of the arrangements to the UK tax authority and an earlier payment of tax.
The UK government seeks comments to aid in the drafting of the legislation by June 8.
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