Autumn statement 2013: Treasury targets tax advisers avoidance loopholes

The proposed clampdown could be in breach of EU rules and predicted an appeal

You just know that the millionaire tax advisers will find a way around some loophole closures. The one that stands out in this Autumn Statement is the one optimistically aimed at the tax advisers themselves.

The Treasury is clamping down on a clever wheeze in which partners of firms like accountants and lawyers reduce their tax bills.

The partners create a company through which they employ their staff. That company then charges the costs – salaries, National Insurance and PAYE – back to the partnership.

Through canny working of the so-called transfer pricing rules – which govern the way related companies deal with each other – the partners get a tax deduction.

“It is a complete tax fiction,” said one tax accountant speaking in confidence.

One adviser quickly spotted that the proposed clampdown could be in breach of EU rules and predicted an appeal.

The Treasury expects to make a saving of £550m over the next five years. Until the lawyers find a way around it, of course.

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