The Inland Revenue acted after a tip off that the managers of a number of millionaires' offshore trusts were planning to dodge tax measures in Gordon Brown's 17 March Budget by switching the money back to Britain and passing it to their wives or children to avoid capital gains tax.
The Treasury took the rare step of bringing forward the tax measures with immediate effect to avoid losing sums which officials said could run into "hundreds of millions of pounds".
The move will boost Mr Brown's room for raising spending in priority areas, such as health and education, but it led to questions about Mr Robinson's own offshore trust by Tory MPs.
David Heathcoate-Amory, the Tory Treasury spokesman, said he would be challenging Mr Robinson in a Commons debate next Tuesday on whether he would be affected by the change. "We want to know whether Geoffrey Robinson has already done this with his own offshore trust," said Mr Heathcoate- Amory.
The Treasury said Mr Robinson had not transferred his trust to the mainland. Mr Robinson, a close friend of Tony Blair, has been advising the Chancellor on ways of closing tax loopholes.
But the clampdown on tax avoidance has highlighted the potential embarrassment facing the Government over Mr Robinson's continuation as a Treasury minister while the Chancellor is making tax avoidance one of his Budget targets.
The Financial Secretary to the Treasury, Dawn Primarolo said: "The Government is determined to stem tax leakage by detecting, detering and countering tax avoidance.
"We will therefore take action, to be included in the next Finance Bill (which will implement the Budget), to prevent avoidance of tax by those who dispose of an interest in, or originating from, a trust which has ever been an offshore trust.
"The measure will have effect in relation to all disposals on or after today."
The exemption applied to people who had a lifetime interest in the income from older offshore trusts. They could sell their right to the income to somebody else, usually a tax-exempt offshore bank, in return for a lump sum free of capital gains tax.
For example, someone getting pounds 50,000 a year from an offshore trust fund invested in company shares worth pounds 1m could sell their lifetime right to the income in return for, say, pounds 500,000 tax-free.
In the budget, the Chancellor is expected to introduce a new starting rate of a 10p tax for the low paid to encourage more into work, but there could be more means testing of benefits. Treasury ministers have been considering taxing child benefit for the better off.
Mr Brown yesterday told a fringe meeting at his party's Perth conference he was discussing extending the "New Deal" proposals to the most run-down estates.
The Chancellor told a fringe meeting at Labour's Scottish conference: "Up and down the country there are estates where not only large numbers are unemployed, but where there are no businesses, no industry, in some cases no shops, no banks, and where the amenities and facilities necessary to built a successful community are not there.
Some estates had unemployment rates three or four times as high as the national average, high truancy, and few opportunities for training or further education, he said. "Unless we begin to tackle these problems we will not be able to say we have genuinely found a solution to tackle the problems of poverty and unemployment."Reuse content