21 Nov 2011
Government likely to welcome balanced General Anti Avoidance Rule report
Following the publication today of the General Anti-Avoidance Rule (GAAR) study by HM Treasury, Elliot Weston, a partner in Lawrence Graham's Corporate Tax practice, commented:
"The most eye-catching measure in the report is the proposal for an advisory panel, with a majority of non-HMRC members, to prevent "mission creep" by HMRC in determining the potential application of a GAAR.
"The proposed GAAR seeks to distinguish between egregious tax schemes and reasonable tax planning designed to secure benefits intended by the tax legislation.
"The key benefit of a GAAR for the government is in being seen to address public concern around tax avoidance, but they will be very mindful of not damaging the UK's attractiveness to business.
"The government is likely to welcome the balance struck in this report and we can expect the next step to be a period of consultation to be announced by the Chancellor in the Autumn Statement."
In December 2010 the government asked Graham Aaronson QC to lead a study that would consider whether GAAR could deter and counter tax avoidance, whilst providing certainty, retaining a tax regime that is attractive to businesses, and minimising costs for businesses and HMRC.
The report by Graham Aaronson QC was published on 21 November 2011. The government will respond to the report at Budget 2012 and has committed not to introduce a GAAR without further formal public consultation.