Among the loopholes discovered by the team are 87 different reliefs for people paying inheritance tax, including ones where the money is coming from a foreign pension or going to a political party (consolation for the bereaved, we’re sure). There are 200 different income tax reliefs, and some more outdated ones, including one for brewers of black beer (Guinness lovers might not be overjoyed to see that one go). As with so many other things in life, Government ministers are privy to their own special loopholes for such essential governmental tools as chauffeur-driven cars and grace and favour homes, like 10 Downing Street, Admiralty House and Chequers, which are automatically given to ministers in certain positions.
It’s now up to Osborne to get down to some serious whittling to reduce the number of tax loopholes. One that’s bound to come in for criticism if it doesn’t come under scrutiny is the legislation surrounding non-doms, who became public enemy number one just after the election when it was revealed that Lord Ashcroft, a senior Tory, wasn’t paying tax in the UK. It even caused in-fighting among the Dragons’ Den dream team. Although the Treasury’s currently working on a review of non-dom policy, as our columnist Luke Johnson pointed out in the November issue of MT, it’s not a black-and-white issue – although we’d wager that point of view isn’t going to be popular when the results of the review are announced.
The Chancellor had promised to get heavy on bureaucracy, and is no doubt keen to up the Government’s earning power as soon as possible by scrapping the tax reliefs (as an example, one loophole it has already closed for high earners putting their savings in pensions is set to save the Government more than £4bn). But he needs to be careful: some of the reliefs up for the chop are vital to businesses. As Mike Warbuton from accountants Grant Thornton told the Telegraph: ‘The danger in this is that important reliefs are thrown out with the bath water.’