Graham Aaronson QC
has today set out his recommendation to the Government for the
introduction to the UK tax system of a narrowly focused general
anti-abuse rule (GAAR).
The recommendation is published in the final report of Mr
Aaronson’s 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 Her Majesty’s Revenue and Customs
(HMRC); and
• offer opportunities to simplify the tax system.
However, it 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, as well as national insurance
contributions. It sets out in detail how a GAAR could be
introduced, and includes an illustrative draft rule. It also
includes a summary of the views of representative bodies in the
tax sector.
Speaking in response to the publication of the review’s
recommendations, David Gauke, Exchequer Secretary to the Treasury, said:
“The Government is committed to tackling tax avoidance. We asked
Graham Aaronson to consider whether a UK GAAR could deter and
counter tax avoidance, while providing certainty, retaining a tax
regime that is attractive to businesses, and minimising costs for
businesses and HMRC. We welcome the completion of his study and
will carefully consider its recommendations against these
criteria, alongside the feedback from businesses and tax
professionals that we look forward to receiving.”
Publishing the report, Graham Aaronson QC said:
“Responsible tax planning is an essential feature in a complex
tax regime, such as the UK’s. But artificial and abusive tax
avoidance schemes are widely regarded as an intolerable assault on
the integrity of the tax regime. A general anti-abuse rule
narrowly targeted to deter such schemes, while not affecting
responsible tax planning, should lead to a fairer, more principled
and ultimately simpler tax system; and I strongly recommend that
such a rule should be introduced into our tax laws.”
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. The Government will discuss the implications of the
proposed rule with business and tax practitioners and respond
fully at Budget 2012, setting out its plans for further, formal
public consultation, if appropriate.
The report is available on the HM Treasury website http://www.hm-treasury.gov.uk/tax_avoidance_gaar.htm
Notes for Editors
1. Graham Aaronson QC was commissioned by the Exchequer Secretary
in December 2010 to lead a study into a GAAR. For further details,
see the HM Treasury website. The terms of reference can be viewed
on the HMRC website.
2. The Government is committed to
predictability and stability for the UK tax system, and would not
introduce a GAAR without further formal public
consultation.
3. The Government is committed to tackling tax
avoidance. Tackling Tax Avoidance, published at Budget 2011 sets
out a clear strategy for the Government’s approach to protecting
the Exchequer and maintaining fairness in the tax system.
4.
Interested parties can send comments regarding the GAAR Study
recommendations to study.gaar@hmrc.gsi.gov.uk.
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