UK and International Tax news

GAAR Study Published

Wednesday 23rd November 2011

In December 2010 Graham Aaronson QC was commissioned by the Exchequer Secretary to lead a study into a General Anti-Avoidance Rule (GAAR).  He has now set out his recommendation to the Government for a narrowly focused General Anti-Abuse Rule.  His recommendation has been published in the final report of an eleven month review of the feasibility for the UK tax system of a GAAR. 

With the advice of a committee of tax experts, he has concluded that introducing a narrowly-focused GAAR would:

  • deter abusive tax avoidance schemes
  • contribute to providing a more level playing field for business
  • reduce legal uncertainty around tax avoidance schemes
  • help build trust between taxpayers and HMRC
  • offer opportunities to simplify the tax system

However, he warns against the introduction of a broad spectrum general anti-avoidance rule.

The report recommends that a GAAR should initially apply to the main direct taxes, income tax, capital gains tax, corporation tax and petroleum revenue tax, plus national insurance contributions.

It sets out in detail how a GAAR could be introduced, includes an illustrative draft rule and also a summary of the views of representative bodies in the tax sector.

The Government will consider the report in detail and the extent to which the proposals could add to HMRC’s existing legislative and administrative approaches and further reduce levels of tax avoidance.  It will discuss the implications of the proposed rule with business and tax practitioners and respond fully in the 2012 Budget, setting out its plans for further formal public consultation, if appropriate.

Those working with Graham Aaronson in the committee included

  •  John Bartlett , Group Head of Tax, BP Plc
  • Judith Freedman, Professor of Taxation Law and Director of Legal Research, Centre for Business Taxation, Oxford University
  • Sir Launcelot Henderson, Judge of the Chancery Division of the High Court of Justice
  • Lord Hoffmann, formerly Lord of Appeal, Judge of the Court of Final Appeal of Hong Kong
  • Howard Nowlan, formerly Tax Partner at Slaughter and May, part time Judge of the First Tier Tax Tribunal
  • John Tiley CBE, Emeritus Professor of the Law of Taxation, Director of the Centre for Tax Law, Cambridge University.

If you would like further information on the above, please contact Keith Rushen on 0044 (0)20 7486 2378.

Contact Us