‘The key difficulty is applying the GAAR to cases where it is not clear if they are or are not abusive,’ guidance says
HMRC has published almost 200 pages of guidance to the general anti-abuse rule that forms part of the current Finance Bill. MPs are set to discuss the Bill, at second reading in the House of Commons, this afternoon.
The guidance is in five parts, A–E. Part D runs to 136 pages and provides examples to illustrate ‘when an arrangement might or might not, applying the double reasonableness test, be treated as abusive in the context of the GAAR’.
The introduction to Part D to states: ‘As an overarching comment it is important to remember a key policy objective of the GAAR – that it is targeted at abusive tax avoidance schemes, but does not delineate in any way what may or may not be regarded as tax avoidance in a broader sense and which HMRC might want to challenge outside the context of the GAAR in any event.’
It adds: ‘Anything which constitutes a tax arrangement will by definition have a main purpose of obtaining a tax advantage – so the examples will all show evidence of tax planning. As the examples … illustrate, however, tax motivated transactions will not necessarily fall to be treated as part of an abusive arrangement.’
The Finance Bill requires a court or tribunal considering the application of the GAAR to take into account the parts (A-D) of the guidance approved by the GAAR advisory panel.
Part E deals with procedure. It has been reviewed by the panel, but does not need to be approved by the panel. A court may or may not take it into account.
‘The key difficulty is applying the GAAR to cases where it is not clear if they are or are not abusive,’ guidance says
HMRC has published almost 200 pages of guidance to the general anti-abuse rule that forms part of the current Finance Bill. MPs are set to discuss the Bill, at second reading in the House of Commons, this afternoon.
The guidance is in five parts, A–E. Part D runs to 136 pages and provides examples to illustrate ‘when an arrangement might or might not, applying the double reasonableness test, be treated as abusive in the context of the GAAR’.
The introduction to Part D to states: ‘As an overarching comment it is important to remember a key policy objective of the GAAR – that it is targeted at abusive tax avoidance schemes, but does not delineate in any way what may or may not be regarded as tax avoidance in a broader sense and which HMRC might want to challenge outside the context of the GAAR in any event.’
It adds: ‘Anything which constitutes a tax arrangement will by definition have a main purpose of obtaining a tax advantage – so the examples will all show evidence of tax planning. As the examples … illustrate, however, tax motivated transactions will not necessarily fall to be treated as part of an abusive arrangement.’
The Finance Bill requires a court or tribunal considering the application of the GAAR to take into account the parts (A-D) of the guidance approved by the GAAR advisory panel.
Part E deals with procedure. It has been reviewed by the panel, but does not need to be approved by the panel. A court may or may not take it into account.
