The Business Expansion Scheme, originally intended to encourage the funding of risky start- ups, is now abused to provide a tax shelter for essentially risk-free ventures that can give a higher rate taxpayer a rate of return of 13-14 per cent a year. Although BES is to be abolished at the end of the year, the Government could have moved more quickly. Any replacement should rigorously meet the original criteria. Tax relief on private medical insurance is also debatable, as is the tax relief on executive share option schemes.
There could also be a tax yield from a close look at the rules governing trusts, and from a re-examination of the UK residency requirements. Mr Brown argues that Britain is lax. But he must be careful. An exodus of highly mobile City communities like the Greek shipowners is in no-one's interest.Reuse content