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GAAR would remove competitive disadvantage, says BP’s Head of Tax

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The general anti-avoidance rule proposed by Graham Aaronson’s study group and now being considered by the government is a realistic response to today’s politics and would create a level playing field in the UK, according to John Bartlett, Head of Tax at BP plc.

Bartlett, one of six tax experts who formed Aaronson’s advisory committee, told delegates at a conference hosted by the Oxford University Centre for Business Taxation that the GAAR would ensure that ‘the vast majority of corporates who do not undertake abusive planning are not at a competitive disadvantage to the few who do’.  A GAAR would also ‘help encourage simplification of the tax code,’ he said.

Professor Ann O’Connellof Melbourne Law School said the Australian experience was that a GAAR had not achieved simplification.

However, the Aaronson report published last November noted that the Australian GAAR was introduced ‘against a background of highly literalist interpretation of tax statutes’, and the UK context ‘is very different’.

Simplification was one of two ‘aspirations’ expressed by representative bodies. ‘Some representative bodies expressed very strongly their view that the protection against abusive tax schemes which the GAAR would bring should be used to ensure that future tax legislation is drafted more simply,’ the report said.

‘While acknowledging that it would take some time before HMRC are confident that the GAAR works as an effective deterrent, they considered it essential that a programme should then be initiated to review and simplify the existing body of legislation. In their view the GAAR would provide an opportunity to gain this very substantial benefit, and that opportunity must not be wasted.’

Aaronson told the conference that there was a moral dimension to the recommendations. In a reference to the Occupy London movement, he suggested that a GAAR as drafted ‘may not satisfy the protestors at St Paul’s’. But it would deter ‘abusive schemes’, he said. The CIOT has warned that the rule might ‘disappoint’ public opinion.

The speakers’ Powerpoint presentations are available on the Centre for Business Taxation’s website.