The targeted anti-avoidance provisions that contain motive tests are being applied in ways which prevent the tax system from operating effectively, writes Constantine Christofi (RPC).
There is a growing sense of concern amongst practitioners that HMRC’s wider strategy is to take a more expansive and at times blinkered approach to what are ordinary commercial transactions structured efficiently with tax in mind. The UK’s tax system is littered with ‘targeted’ anti-avoidance provisions in the form of purpose-based tests: there were more than 300 of them in November 2011 (per the GAAR report by Graham Aaronson QC at para 3.15) and more have since been enacted. The basic rationale for these tests was set out in HMRC’s Simplifying unallowable purposes tests discussion document of July 2009 which answered the question ‘why do policymakers need to consider purpose tests?’ as follows:
‘The Government’s policy...
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The targeted anti-avoidance provisions that contain motive tests are being applied in ways which prevent the tax system from operating effectively, writes Constantine Christofi (RPC).
There is a growing sense of concern amongst practitioners that HMRC’s wider strategy is to take a more expansive and at times blinkered approach to what are ordinary commercial transactions structured efficiently with tax in mind. The UK’s tax system is littered with ‘targeted’ anti-avoidance provisions in the form of purpose-based tests: there were more than 300 of them in November 2011 (per the GAAR report by Graham Aaronson QC at para 3.15) and more have since been enacted. The basic rationale for these tests was set out in HMRC’s Simplifying unallowable purposes tests discussion document of July 2009 which answered the question ‘why do policymakers need to consider purpose tests?’ as follows:
‘The Government’s policy...
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