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Government wins alleged tax avoidance case

The UK authorities are today celebrating a potentially massive win in the courts when a judge ruled that retrospective tax legislation regarding offshore tax avoidance schemes was not against the human rights of those involved. The case centred round a self-employed IT contractor who was hit with a £100,000 tax bill by the UK authorities relating to income received through an offshore tax scheme.

Mr Justice Kenneth Parker ruled that the backdating of tax demands by the government, which has the potential to bring in over £100 million in income tax, was legal and fair. It is believed that around 2,500 taxpayers situated in the UK will also be hit with potentially enormous back tax claims by the UK authorities. The schemes in question have been around for some time and the government brought in legislation in the 2008 Finance Act which effectively allows them to backdate tax demands in these particular circumstances.

Despite the fact that many of those now involved in the fight with the government are unable to pay the large tax demands in question it seems unlikely that the UK government will give up the cause. This is just the latest in a long line of taxation-based initiatives by the UK government which have brought in hundreds of millions of pounds of tax which had initially been shielded or exempted from the old tax legislation.

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