Brown poised to hit tax dodging

GORDON Brown is expected to unleash a raft of anti-tax avoidance measures in tomorrow's Budget to plug a huge shortfall in Treasury coffers.

'We expect to see a very large number,' said KPMG partner John Battersby. 'They won't be discussed in detail, but will be there in the small print.'

As well as a wide range of measures to close tax loopholes, which cost the country £13bn a year, Brown is threatening a general tax avoidance rule.

This sweeping move would mean avoidance schemes could be strangled at birth, rather than pursued individually through slow and costly court cases.

But such a draconian measure would be bound to cause uproar among those who regard tax planning as a sensible and legitimate right.

Britain's growing army of tax advisers made £1.5bn fees last year from these schemes. But accountants argue that a general rule will hit legitimate tax planning by businesses and individuals. Battersby said: 'The Inland Revenue needs to define the boundaries of tax avoidance. The sheer scale of what's involved makes it look unworkable.'

People who try to escape paying inheritance tax on their home by gifting it to their children while they continue to live there could be targeted, he added.

Property chiefs are on tenterhooks. The Budget is expected to be one of the most property-focused ever.

The Chancellor may propose the final shape of the new tax-friendly property vehicles called Real Estate Investment Trusts, which could attract massive interest from small investors and pension funds.

Grant Thornton partner Clare Hartnell thinks Brown may raise stamp duty on commercial property as the price of introducing REITs.

Others fear he will lift stamp duty to 5% on properties worth more than £1m. He is also likely to curb tax breaks for small firms.

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