Changes to the planned General Anti-Abuse Rule (GAAR) have been welcomed by tax experts as a product of proper consultation and sensible listening by HMRC. The publication by HMRC of examples of how the GAAR applies to tax arrangements is also seen as ‘very constructive’.
The changes are revealed in the draft Finance Bill, published today, accompanied by a number of further documents. The Chartered Institute of Taxation (CIOT) has been closely involved in the consultative process and readily acknowledges that progress towards an appropriate rule is being made.
Commenting, CIOT President Patrick Stevens said:
“This is an example of good consultation and the result is a rule that is evolving sensibly. We and many other groups have been in very active dialogue with HMRC and it is good to see they have listened. A number of changes – including to the ‘double reasonableness’ test – reflect points we have made and although not all of our concerns have been met, we are getting towards a workable rule that will be effective against abusive schemes whilst not getting in the way of general business planning.
“We are pleased to see publication of the document setting out 15 situations with HMRC’s views on whether or not the GAAR applies. This is very constructive and is something we called for: indeed, some of the examples are based on suggestions we included in our most recent submission.
“However, perhaps the most welcome announcement is that the GAAR will only apply from Royal Assent to the Finance Bill, rather than 1 April as previously proposed. This delay is something we argued for as we really do need the extra time to debate the examples and the draft guidance and make sure they all get to the right answer. From a first look at the draft guidance, it does need work to make sure it helps taxpayers and their advisers with the areas of uncertainty that will inevitably arise under the GAAR.”
Notes to editors
The GAAR has been developed following a study by a group led by Graham Aaronson QC. The group reported on 21 November 2011, recommending an anti-abuse rule be introduced. The recommendation was accepted by the government and, on 12 June 2012, the Government published a formal consultation on a GAAR targeted at artificial and abusive tax avoidance. The consultation ran for 14 weeks until 14 September. There will be a further consultation on proposed draft legislation in the autumn with a view to introducing legislation in Finance Bill 2013. See http://www.hm-treasury.gov.uk/tax_avoidance_gaar.htm
The CIOT’s response to the June consultation can be read at: http://www.tax.org.uk/tax-policy/public-submissions/2012/GAAR_CIOT_ATT
3. The Chartered Institute of Taxation (CIOT) is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. Through our Low Incomes Tax Reform Group (LITRG), the CIOT has a particular focus on improving the tax system, including tax credits and benefits, for the unrepresented taxpayer.
The CIOT draws on our members’ experience in private practice, commerce and industry, government and academia to improve tax administration and propose and explain how tax policy objectives can most effectively be achieved. We also link to, and draw on, similar leading professional tax bodies in other countries. The CIOT’s comments and recommendations on tax issues are made in line with our charitable objectives: we are politically neutral in our work.
The CIOT’s 16,500 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.
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