GAAR update

The smart money is backing a new "limited" general anti-avoidance rule for next year's Finance Bill, following the recommendations of the Aaronson report last November. According to what is beginning to become the accepted sequence for developing legislation, that would suggest a formal consultation document will emerge on 21 March, with a summer consultation deadline, leading to draft legislation in December this year ready for next year's Finance Bill.

Next Wednesday's Budget paperwork will be a good indication about how consistent this formula has begun. It's also a good opportunity to get your arguments in order ahead of next week's rush. That was the philosophy of Baker Tilly tax partner George Bull, who sent us these thoughts:

 

"We expect to see further progress towards a General Anti-Abuse Rule (GAAR) in the Budget. The aim is to stop schemes that virtually everyone would accept as being abusive, not to prevent individuals and companies organising their affairs in a way that minimises their tax costs. The proposal has been framed to allow people to take normal steps to mitigate their liabilities by exercising reasonable choices afforded by legislation. We wait to see how many of the proposed safeguards are accepted by the government.

"Any aggressive scheme that is going to be affected by a GAAR will already be subject to, or open to, a challenge by HMRC’s Anti-Avoidance Group, and the GAAR will simply give that team another weapon for their armoury. Even if taxpayers involved in a scheme ensure that all steps have been completed before Budget day, all that they will achieve is a reduction in the complexity of the dispute or litigation that follow the challenge to the scheme.

"Some taxpayers reject the idea of a GAAR as causing increased uncertainty for businesses looking to invest in the UK, but at the other end of the spectrum it has been welcomed as setting out clearer boundaries to HMRC’s powers to challenge planning."

There are some good contributions on our original Aaronson report, and on stories collected on our  GAAR tag page. But do please add further thoughts below if you want to join the debate.

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