Muted response to Budget from legal community

In today’s Budget speech the Chancellor said he will look to implement an international “systemic risk tax” on financial institutions as well as trailing a raft of anti-avoidance measures.

The Government will seek to implement the tax along with fellow G20 member to ensure that institutions take into account the risks associated with their activities.

“Whether Darling’s plan for a globally agreed tax is the right approach may be a moot point, given the Tories’ present lead in the polls,” said Paul Edmonson, a banking partner at CMS Cameron McKenna. 

“However, the key question is whether any kind of bank levy is really the right way to address banks’ risk-taking or whether it is simply populist window-dressing that will fall short of ensuring future financial stability.”

Among the anti-avoidance measures are an extension to the tax disclosure regime, which would force innovative tax plans, such as employee benefit trusts used by private equity houses, to be revealed to HMRC at an earlier stage.

Other measures for tackling tax avoidance in the Budget include the signing of new tax information exchange agreements (TIEAs) with offshore havens such as Belize, Dominica and Grenada.

Penalties for tax avoidance in these territories will also increase, under Darling’s proposals.

Ashley Crossley, head of Baker & McKenzie’s European wealth management group and a former Conservative parliamentary candidate, said the new collection of measures had “moved the goalposts” without addressing economic reality.

“They’re not dealing with the fundamental point, which is capital gains tax. It’s about making a political statement but the economics don’t add up,” he said.