§ Ms LawrenceTo ask the Chancellor of the Exchequer what plans he has to take action against the avoidance of capital gains tax through the purchase of trust losses. [87559]
§ Dawn PrimaroloThere is mounting evidence that the tax rules which provide for capital losses realised within trusts to pass to beneficiaries in certain circumstances are being widely abused for the purpose of avoiding capital gains tax. Avoidance schemes are being set up and marketed specifically to take advantage of these rules by enabling people to purchase interests in trusts with losses. In some cases very large losses are being manufactured within trusts to exploit these rules. If successful, these schemes could lead to a very significant loss of tax revenue.
The Government are not prepared to tolerate this sort of avoidance activity which undermines the integrity of the tax system and creates unfairness between taxpayers. A new clause will shortly be tabled for Report to tackle this abuse. The new Clause will restrict the circumstances in which losses accruing to trusts can be transferred to beneficiaries and the use which beneficiaries can make of such losses.
The Inland Revenue are today issuing a Press Release giving details of the new Clause.