Artificial and abusive tax avoidance schemes are widely regarded as ‘an intolerable assault on the integrity of the tax regime’ and make a mockery of the will of Parliament, Graham Aaronson QC said today as he recommended the introduction of a narrowly targeted ‘general anti-abuse rule’ into UK tax law.
But introducing a ‘broad spectrum’ general anti-avoidance rule would not be beneficial. ‘This would carry a real risk of undermining the ability of business and individuals to carry out sensible and responsible tax planning. Such tax planning is an entirely appropriate response to the complexities of a tax system such as the UK’s,’ he said.
The government said at the June 2010 Budget that it was committed to tackling tax avoidance and intended to develop strategic responses to address ‘long-standing avoidance risks’. As part of that work, it would examine whether, as one element of strengthened defences, there was a case for developing a general anti-avoidance rule (GAAR).
In December 2010 the government asked Aaronson, a tax barrister specialising in commercial taxation, to consider ‘whether a 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 government will now discuss the implications of the proposed rule with business and tax practitioners, and respond at Budget 2012.
Level playing field
Aaranson worked with an advisory committee of tax experts and has concluded, HM Treasury announced today, 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; and offer opportunities to simplify the tax system’.
The report includes an illustrative draft GAAR and recommends that the rule 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’, the Treasury said.
Aaronson’s advisory committee comprised:
John Bartlett, Group Head of Tax, BP Plc;
Judith Freedman, Professor of Taxation Law and Director of Legal Research at Oxford University’s Centre for Business Taxation;
Sir Launcelot Henderson, Judge of the High Court, Chancery Division;
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; and
John Tiley, Emeritus Professor of the Law of Taxation, Director of the Centre for Tax Law at Cambridge University.
Artificial and abusive tax avoidance schemes are widely regarded as ‘an intolerable assault on the integrity of the tax regime’ and make a mockery of the will of Parliament, Graham Aaronson QC said today as he recommended the introduction of a narrowly targeted ‘general anti-abuse rule’ into UK tax law.
But introducing a ‘broad spectrum’ general anti-avoidance rule would not be beneficial. ‘This would carry a real risk of undermining the ability of business and individuals to carry out sensible and responsible tax planning. Such tax planning is an entirely appropriate response to the complexities of a tax system such as the UK’s,’ he said.
The government said at the June 2010 Budget that it was committed to tackling tax avoidance and intended to develop strategic responses to address ‘long-standing avoidance risks’. As part of that work, it would examine whether, as one element of strengthened defences, there was a case for developing a general anti-avoidance rule (GAAR).
In December 2010 the government asked Aaronson, a tax barrister specialising in commercial taxation, to consider ‘whether a 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 government will now discuss the implications of the proposed rule with business and tax practitioners, and respond at Budget 2012.
Level playing field
Aaranson worked with an advisory committee of tax experts and has concluded, HM Treasury announced today, 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; and offer opportunities to simplify the tax system’.
The report includes an illustrative draft GAAR and recommends that the rule 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’, the Treasury said.
Aaronson’s advisory committee comprised:
John Bartlett, Group Head of Tax, BP Plc;
Judith Freedman, Professor of Taxation Law and Director of Legal Research at Oxford University’s Centre for Business Taxation;
Sir Launcelot Henderson, Judge of the High Court, Chancery Division;
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; and
John Tiley, Emeritus Professor of the Law of Taxation, Director of the Centre for Tax Law at Cambridge University.
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