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PBR: New 'targeted' CGT anti-avoidance rule effective today

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6th Dec 2006
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The pre-Budget report included a new targeted anti-avoidance rule (TAAR), effective today, to ensure that allowable capital losses are restricted to genuine commercial transactions.

The changes will be effected by a new s16A of the CGTA 1992 set out in draft clauses available in the PBR related supplementary documents file (2Mb ZIP archive) on the HMRC website. The legislation is designed to take effect where a person enters "deliberately and knowingly" into arrangements to avoid tax.

The guidance notes accompanying the new clauses explain that the intent of the TAAR is to apply the principle that relief is available only where a person has suffered a genuine commercial loss and made a real commercial disposal.

"This principle is neither new, nor startling," claimed the guidance notes.

Chiltern senior tax consultant Paul commented, "The concepts of arrangement and tax advantage look fairly familiar from other areas of legislation. Effectively, it says that If HMRC officials don't like the look of the loss, they will disallow it."We already have examples of targeted anti-avoidance rules such as s703 ICTA 1988, which targets transactions in securities, but this feels different in the light of the current campaign to clamp down on avoidance in general."

Early on in Gordon Brown's reign as chancellor, his idea to introduce a general anti-avoidance rule was beaten back by Tories and tax professionals.

"I wonder if this fairly general targeted rule is testing the water. If this works, perhaps they will expand it to a GAAR without anyone noticing," speculated Howard.
ne step back from a general anti-avoidance rule, and it's a bit of armoury that sits alongside anti-avoidance legislation to block specific schemes.

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By John Traynor
21st Sep 2016 08:02

With the Revenue increasingly being denuded of resources how are wide ranging generalised anti avoidance measures to be equitably monitored without placing client and tax advisor in conflicting relationships

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