A crackdown on tax avoidance schemes is to be launched as part of Chancellor Gordon Brown's bid to narrow the UK's Budget deficit.

The chancellor is set to introduce new rules which will give the Inland Revenue the option to nip tax avoidance moves in the bud.

The 'disclosure' rules will mean that firms have to thoroughly explain the nature of tax avoidance schemes and what tax loopholes are being exploited to the Inland Revenue before being allowed to recommend them to clients.

The tax avoidance scheme will have to be registered with the Inland Revenue, giving the taxman time to change the law to close the loophole about to be exploited.

Over-reaction?

This wide interpretation is a sledgehammer to crack a nut Chas Roy-Chowdury, Association of Chartered Certified Accountants

"This is going to have a quite dramatic impact," said Chas Roy-Chowdury, head of taxation at the Association of Chartered Certified Accountants.

"Disclosure means that the Inland Revenue will be operating a pre-clearance system for any idea a business and even an individual has for minimising tax liability."

According to the Budget report disclosure would apply to "certain tax schemes and arrangements."

"We know the government is worried about some firms getting away with ever more complex tax avoidance but this wide interpretation is a sledgehammer to crack a nut," Mr Chowdury said.