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Targeted anti-avoidance rules

The decision in Lloyds Bank Leasing illustrates an inherent problem with TAARs which employ purpose-based tests to restrict the availability of tax expenditure reliefs: since the point of tax reliefs is to alter taxpayer behaviour, why then should taxpayers be denied relief for responding accordingly? 
 

We might rather loosely divide reliefs in our tax system into two types: those designed to shape our tax system – by improving progressivity ensuring the ‘correct’ calculation of profits and so on – and those through which the government of the day seeks to encourage certain types of behaviour in order to advance its policy objectives. Come to think of it there’s a third type too: those through which the government of yesterday sought to deliver its policy objectives and which no one...

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