The government announced that the Export Credits Guarantee Department (ECGD) will consult on a new facility to provide government support for short-term trade finance by sharing risks with banks in confirming letters of credit. The aim of the facility is to give exporters greater certainty about payment when selling goods in difficult markets. It will be funded out of the Working Capital Scheme (WCS) (see Legal update, government announces measures to assist financing of small and medium businesses for more on the WCS).

For more information, see Chapter 4 (Supporting businesses) of the 2009 Budget Report.

The government announced that, from May 2009 until the end of December 2009, suppliers will be able to purchase six-months' top-up trade credit insurance from the government, if credit limits on their UK customers are reduced. The scheme will be available to those businesses that already buy trade credit insurance.

For more information on the scheme, see Legal update, Trade credit insurance top-up scheme and principles announced.

CVAs. The Insolvency Service will consult on:

The European High Yield Association, among others, has been pushing for changes to insolvency law (see Legal update, The European High Yield Association proposes reform to UK insolvency law).

Pre-packs. In June 2009, the Insolvency Service will publish a report on how the regime that monitors pre-pack sales has operated in its first six months, and will then publish further follow-up reports on an annual basis. The aim of the report is to prevent creditors from being treated unfairly through abuse of pre-pack sales.

For more information, see Chapter 4 (Supporting businesses) of the 2009 Budget Report.

A measure will be introduced to remove tax barriers to transfers of business between mutual societies taking place on or after 22 April 2009. Such transfers may take place in the context of a restructuring.

For more information, see paragraph 3.68 of Chapter 3 (Financial Stability) of the 2009 Budget Report and 2009 Budget – BN20 – Transfers of business between mutual societies.

The Finance Bill 2009 will provide relief from stamp duty and SDRT charges that would arise if a stock lending or repo arrangement terminates and the stock is not returned to the originator under the terms of the stock lending or repo owing to the insolvency of one of the parties. These proposed changes were announced in the 2008 Pre-Budget Report. For more information, see PLC Tax, Legal update, Pre-Budget Report 2008: key business tax announcements: Stock lending and repos: disapplication of tax charges. A parallel relief will apply for the purposes of the tax on chargeable gains to avoid the charge which would otherwise arise under sections 263A and 263B of the Taxation of Chargeable Gains Act 1992. The changes will apply where the insolvency of the borrower or lender occurs on or after 1 September 2008.

For more information, see 2009 Budget - BN18 - Stock lending and repurchase arrangements: stamp duty, stamp duty reserve tax and tax on chargeable gains.

HMRC will shortly publish a list of avoidance schemes that it believes to be ineffective, to discourage potential users of these schemes, and has said that it will challenge these schemes when encountered. It will also commence discussions with interested parties about extending the hallmarks used to identify avoidance schemes and increasing penalties for the non-compliant.

For more information, see PLC Tax, Legal update, 2009 Budget: key tax announcements: HMRC to publish "spotlight" on selected avoidance schemes and consult on extending tax disclosure "hallmarks" and Budget 2009 - Press Notice 3 and paragraph 4.53 of Chapter 4 (Supporting businesses) and paragraphs 5.98 and 5.101 of Chapter 5 (Helping people fairly) of the 2009 Budget Report.

The Finance Bill 2009 will counter two avoidance schemes notified to HMRC under the tax avoidance disclosure rules. Draft legislation has not been published but the essence of the proposed anti-avoidance legislation is as follows:

For more information, see 2009 Budget - BN32 - Financial arrangements avoidance.

A targeted anti-avoidance rule will be introduced to counteract schemes which exploit the foreign exchange (forex) matching rules for avoidance purposes.

Broadly, the forex matching rules allow companies to "match" non-sterling shares with, for example, a loan or derivative in the same non-sterling currency. Once matched, exchange gains and losses on the loan or derivative are ignored for corporation tax purposes until the shares are sold. For further detail, see PLC Tax, Practice note, Derivatives: tax.

The new measure will prevent matching of exchange gains or losses on derivative contracts in certain circumstances.

For more information, see PLC Tax, Legal update, 2009 Budget: key tax announcements: Foreign exchange losses and 2009 Budget - BN35 - Foreign exchange losses: targeted anti-avoidance rule.

Legislation will be introduced to reduce the scope for avoidance schemes which involve routing loans and other financial transactions through an investment subsidiary, where the income is taxed differently from the parent. HMRC is currently involved in a dispute with at least one major banking group over the application of the Finance Act 2005 anti-avoidance legislation to artificial structures that are avoiding millions of pounds of tax. The measures, the draft legislation for which has not yet been released, will take effect from 22 April 2009.

For more information, see 2009 Budget - BN60 - Double Taxation Relief Avoidance: Credit Abuse.

The Finance Bill 2009 will restrict tax relief for interest payments on loans used to invest in partnerships and close companies and which are guaranteed to produce a post-tax profit. The measure was announced by HM Treasury on 19 March 2009 and HMRC published draft legislation and an explanatory memorandum shortly after.

For further details, see PLC Tax, Legal update, 2009 Budget: key tax announcements: Interest relief and Budget 2009 - BN38 - Anti-avoidance: interest relief.

The 2009 Budget confirmed that legislation will be introduced in the Finance Bill 2009 to counter avoidance involving the leasing of plant and machinery with effect from 13 November 2008. For details, see PLC Tax, Legal update, Pre-Budget Report 2008: key business tax announcements: Leasing: anti-avoidance measures confirmed. In addition, for sales on or after 22 April 2009, changes are proposed to the definition of sale and leaseback in sections 216 and 221 of the Capital Allowances Act 2001 to cover a sale and leaseback to a person connected with the seller and unspecified changes are proposed "to reduce avoidance opportunities".

For more information, see 2009 Budget - BN33 - Anti-avoidance: plant and machinery leasing.

The Finance Bill 2009 will contain provisions which, broadly, provide that returns from arrangements that produce amounts economically equivalent to interest will be treated in the same way as interest for the purposes of corporation tax.

There will be an exclusion where:

The legislation will apply generally to arrangements to which a company becomes party on or after 22 April 2009. It will also apply to certain arrangements in place before that date that are within the scope of existing disguised interest legislation which is to be repealed.

For more information, see 2009 Budget- BN37 - Disguised interest.