Brown's 10th Budget to target tax avoiders

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The Independent Online

Businesses and their advisers are likely to be the main target for Gordon Brown when he delivers his tenth - and possibly last - Budget as Chancellor on Wednesday.

Mr Brown is expected to target tax avoidance schemes, landowners, venture capitalists, private equity groups, company cars and property companies.

However, any moves for either businesses or families are likely to be limited, despite calls for a relaxation of the rules on both stamp duty and inheritance tax, in the face of continued house price growth. Economists are not expecting any major changes in the forecasts for growth or public finance.

Accountants believe Mr Brown will launch a fresh clampdown on schemes to avoid clients' tax liabilities - a theme of the last four Budgets. Grant Thornton said that following an extension of the disclosure rules - which force advisers to run plans past the Treasury - to stamp duty, Mr Brown would probably go further.

Stephen Quest, its tax partner, said: "There will be new rules to counter new tax schemes and a broadening of the requirements of tax advisers to disclose proposed plans. While it is reasonable to attack abuses of the tax code, there is a big risk this will create more complexity in the tax system and adversely affect the ability of business to do commercial deals with the certainty that is needed."

Other sensitive target areas include:

* Abolition of tax breaks for venture capital trusts that expire on 5 April;

* Additional taxes on management teams and equity fund managers in private equity transactions that include raising capital gains tax to 40 per cent from 10 per cent;

* Setting the level of the "conversion charge" on schemes that join a real estate investment trust (Reit). Experts are hoping for a 15 per cent levy on the revaluation gain payable over five years;

* Details of the planning gains supplement that will impose a tax on land that received planning permission for development;

* Capital allowances on company cars based on CO2 emissions.

The Chancellor is expected to use his milestone tenth Budget to proclaim his achievements over the last nine years. He is also expected to highlight the challenges facing the economy over the next decade from trends such as globalisation and an ageing population.

Business groups have used their pre-Budget submissions to urge the Chancellor to cut the tax burden on business.

The CBI called for a £5.5bn tax cut, pointing out that taxes on business are set to show an £80bn rise over the period 1997-2010. Ian McCafferty, its chief economic adviser said: "The Budget is the Chancellor's opportunity to lift his foot a touch from the Government's spending pedal and give the private sector the breathing space it needs to deliver stronger growth in the future."