As part of a wider HMRC clampdown on tax avoidance, a study on a proposed general anti-abuse rule (GAAR) was undertaken by Graham Aaronson in December 2010.
In line with the original study, a more recent consultation has been completed, and generally recommends a narrowly focused approach, aimed at purely tackling abusive tax avoidance schemes.
Commenting on the conclusions of the study, Exchequer secretary David Gauke said that whilst a ‘broad spectrum’ would not be beneficial to the UK tax system, this rule will help target artificial and abusive tax avoidance schemes.
He continued, “The introduction of a GAAR will strengthen our anti-avoidance strategy, complementing the tools HMRC already has at its disposal and acting as a deterrent to those engaging in artificial and abusive avoidance schemes. The rule we are consulting on will effectively tackle such schemes, while minimising the impact on the vast majority of taxpayers who pay a fair share.”
The defined scope of the draft proposals have been generally welcomed, as the intention is still to target abusive artificial schemes and not to affect the broad centre ground of tax planning.