The proposed General Anti-Avoidance Rule, published today and written by Graham Aaronson QC, about which I wrote earlier today, attacks arrangements with one or more of these qualities:
(a) arrangements that would result in receipts being taken into account for tax purposes which are significantly less than the true economic income, profit or gain;
(b) arrangements that would result in deductions being taken into account for tax purposes which are significantly greater than the true economic cost or loss;
(c) arrangements that includes a transaction at a value significantly different from market value, or otherwise on non-commercial terms;
(d) arrangements, or any element of it, inconsistent with the legal duties of the parties to it;
(e) arrangements including a person, a transaction, a document or significant terms in a document, which would not be included if the arrangement were not designed to achieve an abusive tax result;
(f) arrangements that omit a person, a transaction, a document or significant terms in a document, which would not be omitted if the arrangement were not designed to achieve an abusive tax result; and
(g) arrangements that include the location of an asset or a transaction, or of the place of residence of a person, which would not be so located if the arrangement were not designed to achieve an abusive tax result.
All or welcome; the last especially so since it is clearly aimed at tax havens.
And all have another welcome characteristic: without exception the drafting notes that the arrangements in question are legal and would work but for the new GAAR. The idea that tax avoidance can be made illegal has been established. That is massive leap forward in thinking.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
how does g fit in with the european freedom of establishment/freedom of capital movement principles? is this actually EU compliant?
I dont see it mentioned, but I think any GAAR has to come with a clearance procedure, otherwise you lose certainty for all taxpayers, not just the evaders. I cant see any good reason to object to this, HMRC could decline clearance where they wanted to, and they get a heads up that someone is up to something via the clearance procedure as well.
steveT is talking balls. Setting that aside as we must, challenges based on principles a-g are consistent the UK legal framework as it stands.
I agree
And so did the highly learned committee advising on this – and the people concluted
i thought you moderated posts for abuse of other posters RM?
why does Dave object to a clearance procedure so much? would be nice to hear the reasoning rather than infantile abuse.
alternatively maybe he was talking about the EU point? i was asking whether the proposal was compatible with EU law – i made no opinion on whether I agreed or disagreed, it was a straightforward question – so much of our laws these days are affected by the EU dimension I think its a reasonable question to ask.
Respectfully, I think Dave was not over the top – you were making unfounded claims and he called your bluff
In doing so he clearly showed he either a) knew more or b) was more honest
And clearance procedure is undesirable because of the panel set up as protection instead
Richard