Government to tackle artificial and abusive tax avoidance schemes

Government to tackle artificial and abusive tax avoidance schemes

The Government has launched a consultation in relation to tackling artificial and abusive tax avoidance schemes. The proposed new general anti-abuse rule (GAAR) follows the Budget 2012 announcement that such a rule will be introduced in 2013.

The introduction of the GAAR follows an independent review led by Graham Aaronson QC. The review concluded that the introduction of a targeted rule would deter artificial tax avoidance schemes and in addition would help create a more level playing field for business.

In addition to considering the report, the Government has also held informal discussions with businesses, tax practitioners and representative bodies to find out their views prior to drawing up the consultation and draft legislation, both of which are published today.

In line with Graham Aaronson’s recommendations, the proposed GAAR will apply to the main direct taxes and also to National Insurance and will be expanded to cover Stamp Duty Land Tax (SDLT).

The consultation also proposes an extension of the GAAR to Inheritance Tax and makes clear that the Government will consider including further taxes if appropriate.

David Gauke, Exchequer Secretary to the Treasury, said:

“The introduction of a GAAR will strengthen our anti-avoidance strategy, complementing the tools HMRC already has at its disposal and acting as a deterrent to those engaging in artificial and abusive avoidance schemes. The rule we are consulting on from today will effectively tackle such schemes, while minimising the impact on the vast majority of taxpayers who pay a fair share.”

Full details of the consultation can be found on the H M Revenue & Customs web site (customs.hmrc.gov.uk/channelsPortalWebApp/downloadFile?contentID=HMCE_PROD1_032113)