Treasury clampdown on tax avoidance schemes - GAAR consultation begins
Posted Jun 14, 2012
The Treasury has launched its long-awaited consultation into the introduction of a new General Anti-Abuse Rule (GAAR), which could act as a strong deterrent against a range of tax avoidance schemes.
In late 2010, the Government initially tasked Graham Aaronson to conduct an independent study to determine what affect the introduction of a GAAR would have on tax avoidance, while ensuring that the UK retains a tax system which is favourable to businesses.
Aaronson concluded that a 'broad spectrum' GAAR would not benefit the tax system as a whole, and recommended a GAAR which was targeted at specific 'abusive arrangements'.
The Chancellor announced at Budget 2012 that he had taken into account Aaronson's recommendations, and that a GAAR consultation would be launched in due course.
The proposed GAAR would target all direct taxes, including Corporation Tax, Income Tax, CGT, National Insurance, Petrol Revenue Tax, and Stamp Duty. Inheritance and other taxes may also be included in the future.
Artificial and 'abusive' tax schemes are clearly the main targets of the proposed rules, where the main reason for the existence of such schemes is to 'gain a tax advantage'.
The consultation period lasts for 14 weeks until 14th September 2012, and invites the views of tax advisers, professional bodies, business people, and any individuals who have an interest in the proposals.
A summary of responses is expected to be published in the Autumn, with the GAAR set to become law via the Finance Bill 2013.
You can download the GAAR consultation document here (PDF).
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