Ding, dong, the double tax treaty anti-avoidance rule is dead!

David Cameron seems to have come back from holiday with a renewed determination to eliminate red tape. John Stokdyk reports on how this reforming zeal brought about the demise of one unpopular tax proposal.

Back in August, the ICAEW Tax Faculty drew up a schedule of current consultations and reached 26 from HMRC, plus two from the Office of Tax Simplification.

By putting out so many different consultation papers during the summer, the government appeared to be to be outsourcing much of the technical work needed before ideas and outline propsals were ready for the parliamentary draftspeople.

Against that backdrop, it will come as a relief that one of the less well received proposals - for a set of anti-avoidance measures around tax treaties - has been dropped. It didn’t even make the Tax Faculty digest before Exchequer Secretary to the Treasury David Gauke announced its demise last Friday. The official record at HMRC has been purged of the original consultation paper.

Please accept our apologies for not alerting you to its existence and archiving a copy when it appeared in August.

In essence, we understand, the idea was for a general anti-avoidance provision in the Finance Act 2012 that would prevent the use of double tax treaties if their purpose was deemed to be tax avoidance. Tax experts questioned the legality of the approach and pointed to the complexities of the regime that would result.

“It was such a mess of a proposal I couldn't see how it was realistically supposed to be make sense in the context of the government's approach elsewhere,” commented our international tax guru Anne Fairpo.

There will no doubt be dancing in the chambers and corridors of international tax specialists as a result of this announcement. But if you detect a note of fatigue and resignation, it comes from the realisation that there may be one less consultation to deal with between now and Budget day - but there are 25 to go…

If, like Anne Fairpo, this sort of thing is up your street, you can join her in AccountingWEB's new international tax discussion group.

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