The move from the Treasury is the first time to Coalition government has clawed back taxes which have been avoided in the past, and the closure of the loopholes will also ensure billions of pounds in tax are paid in future.
One of the schemes which has been closed down involved a bank avoiding corporation tax on profits it made buying back its own IOU-notes; and the Treasury said it will move to block the recent use of the scheme by the bank and by any other company.
The second scheme involved investment funds trying to receive tax credits from the Treasury on non-taxable income; and the government yesterday brought in legislation to block any future use of the scheme.
David Guake, the Exchequer secretary said that the government was clear that “businesses must pay the tax they owe, when they owe it.”
He added: "The Government wants to ensure that the tax system is fair for all and we will not allow those who seek to benefit from this aggressive avoidance to get an unfair advantage.
“We do not take today's action lightly, but the potential tax loss from this scheme and the history of previous abuse in this area mean that this is a circumstance where the decision to change the law with full retrospective effect is justified."
Tax avoidance - unlike tax evasion - is not illegal but the UK's major banks have agreed to a code of practice to pay their fair share with the government.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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