The Proposed General Anti-Avoidance Rule: Will it Really Help?
Mark McLaughlin asks if the proposed legislation to stop people avoiding tax will create more problems than it solves.
I attended a tax conference a few days ago, in which one of the speakers (an eminent tax QC) was discussing the General Anti-'Abuse' Rule (GAAR), and the effect of its proposed introduction on tax disputes.
I must confess that I was among those in favour of a GAAR, but only on the assumption that it would reduce the need for additional anti-avoidance legislation, and that it would reduce the volume of current legislation.
Unfortunately, the conference speaker expressed the view that a GAAR would not reduce the volume and complexity of existing specific Targeted Anti-Avoidance Rules ('TAARS') (of which apparently there are currently over 300) for at least 5 years, when HM Revenue & Customs and the Treasury hopefully become confident that the GAAR is working in practice.
In addition, the speaker indicated that between the two extremes of "egregious" tax avoidance schemes and reasonable "tax management", there would inevitably be a middle ground of cases reaching the courts and tribunals. In other words, there would be litigation for many years to come.
Personally, I found these predictions, whilst undoubtedly learned and also very illuminating, thoroughly depressing. The future of tax simplification looks very bleak. It makes me wonder if it is worth bothering with a GAAR at all, other than to stamp out extreme tax abuse. Only time will tell.
Best wishes,
Mark McLaughlin
Managing Editor
Please register or log in to add comments.
There are not comments added