SECURING THE TAX BASE

The Chancellor today unveiled a substantial package of measures
designed to attack avoidance and safeguard future revenue. He said
that the general anti-avoidance rules (GAAR) for corporate direct
taxes remained an option for the future if more targeted legislation
proved ineffective in dealing with the problem of avoidance, but that
the Government would not be proceeding with a GAAR in this Budget or
with a mini-GAAR for VAT on construction services.

Today's package re-emphasises the Government's commitment to creating
a fairer tax system. It covers a range of loopholes and abuses where
exploitation is reducing tax revenues at the expense of compliant
taxpayers.

The main elements in the package involve action on:

Corporation Tax    -    reverse premiums IR 32
                            -    controlled foreign companies IR34
                           -    capital gains on certain company sales IR 29

VAT                    -    grouping C&E 1 & 7
                            -    assignment of debts C&E 7
                           -    land and property C&E 7
                           -    construction services C&E 7
                           -    capital goods scheme C&E 7
                            -    repayment supplement C&E 7

Inheritance Tax - gifts with reservation IR 28

Measures to protect the Stamp Duty Reserve Tax revenue base in
relation to non-sterling bearer shares were announced in an Inland
Revenue press release on 29 January 1999 and measures to tackle
avoidance of the deep discount security rules were announced in an
Inland Revenue press release on 15 February 1999.

The Chancellor has also announced that he intends to act against
disguised employment arrangements where intermediary vehicles such as
companies and partnerships are used to avoid tax and national
insurance contributions. Legislation will be introduced to deal with
this problem in Finance Bill 2000.

The Chancellor also intends to bring forward in Finance Bill 2000
measures to modernise Inland Revenue's powers for the criminal
investigation of suspected serious tax fraud, in particular to obtain
evidence from third parties. Draft clauses will be issued which will
form the basis for consultation on the proposals.

The Budget package includes an updated compliance regime for stamp
duty IR 16 and for inheritance tax IR 14.

The government will make it easier for taxpayers to meet their
obligations by offering improved guidance and support and making
provision for increased electronic communication CW 1.

The measures announced will together yield more than #1 billion over
three years and protect a further #3 billion of future revenues.

Press enquiries to HM Customs & Excise, Public Relations Office, New
King's Beam House, 22 Upper Ground, London SE1 9PJ.
Telephone: 0171 865 5468/5471

Press enquiries to Inland Revenue
Telephone: 0171 438 6692/6706/7327/7356

Non-media enquiries to Inland Revenue
Telephone: 0171 438 6420/6425
Others should contact their local VAT Business Advice Centre, listed
under Customs and Excise in the telephone book.
Customs and Excise Internet address:
http://www.hmce.gov.uk

Inland Revenue Internet address:
www.inlandrevenue.gov.uk

This news release can also be found at:
http://www.hm-treasury.gov.uk
Other Treasury material can also be found at this address.

# = pounds sterling

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