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The Treasury introduces GAAR (General Anti-Avoidance Rule). 19/12/11

In a Treasury-commissioned report (21/11/11), HM Treasury recommending the introduction of a General Anti Avoidance Rule (GAAR) in the UK. It recommends that  GAAR should initially apply to income tax, capital gains tax, corporation tax and petroleum revenue tax, as well as to national insurance contributions (NICs). Once a GAAR was operating fairly and effectively, it could be extended to other taxes such as stamp duty land tax, the report said. However, it recommended against including VAT which has its own anti-abuse rules derived from EU law.

Why is a GAAR needed?

Under the current system tax avoidance is addressed in three main ways:

• The purposive interpretation of statutes by the Courts;
• specific anti avoidance legislation; and
• rules requiring the disclosure of tax avoidance schemes (DOTAS).

The report recognised that although these are to some extent effective at reducing tax avoidance, they do not always prevent some of the more blatant tax avoidance schemes.

Stuart Coleman, Manager of the Tax Department of ABDS says:

“It is important to bear in mind that the report is only making recommendations. Although it is likely that the government will follow in substance what has been recommended, there is no guarantee that the proposals will be enacted in exactly the form suggested in the report.”

The government intends to respond fully at Budget 2012.
We at ABDS will keep you informed
If you have any questions or concerns about Tax Planning and its implications, contact ABDS Tax team.

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail:

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