The UK government's consultation on a general anti-avoidance rule was launched yesterday.
Let me be clear: I want a general anti-avoidance rule. Even better, I want a general anti-avoidance principle. But that's not what this proposal is about. Even its author, Graham Aaranson, says the proposal is not for a GAAR.
And that issue is at the core of me objection to this proposal. What we're being presented with is a piece of sophistry. Something called a GAAR that is no such thing is being put forward as if it might be a serious obstacle to tax avoidance when it will tackle only a few schemes a year, at most, and will allow the vast majority of aggressive tax avoidance - the 'morally repugnant' activity to which George Osborne so recently referred - to continue unhindered despite it. Indeed, worse than that, because 99% of aggressive tax avoidance will not be affected those undertaking it will now argue that what they do is wholly acceptable.
This in that case is a proposal that is too weak, too limited and too tax avoider friendly.
I wholeheartedly agree with the TUC's comments reported in the FT in that case:
The TUC said Treasury plans were a step in the right direction but would only tackle a tiny number of schemes. “We need far more robust reform if the government is serious about cracking down on those companies and individuals avoiding tax”.
But I should add, I do advise the TUC on this issue.
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:
With due respect to Graham Aaronson, he is hardly going to recommend a proposal that will put him and his learned friends in the Tax Bar and his mates in the Big Four out of business. It’s a sad indictment on the British society that the Chancellor bowed to big business in appointing him in the first place and worse nobody seemed to have opposed it. But it’s not too late. Opponents of this disgraceful proposal should articulate their opposition better.
We’ll try
What an ill-judged comment. The Tax Bar also act for HMRC.
Perhaps you should take a good look at the 1997 Tax Law Review Committe Report on a GAAR for the UK. It concluded that a broad GAAR should be introduced but this was rejected by the government and in particular HMRC.
This commitee was stuffed full of academics, judges, accountants, solicitors and members of the Tax Bar.
The Chairman was one Graham Aaronson.
Your petty assertion adds little to the debate – particularly as the Tax Bar stand to gain a lot more from a broad GAAR than from this narrow one.
Aaranson has never acted for the Revenue
I think that was the basis for the comment
I don’t think we need a GAAR. We are still (just about) governed by the rule of law in this country. If an avoidance scheme works, then the tax should not be due. If it doesn’t it should be, together with interest and perhaps penalties. Parliament is sovereign: it can change the law if it doesn’t like the outcome.
That ought to be the legal position. Then we come to the discussion about morality. Perhaps it is “morally repugnant” to avoid tax in an “artificial” way. I might say that it is “morally repugnant” to cheat on your wife or for a government to collect taxes and squander it on creating a bloated public sector guaranteed to vote them in next time. But you answer to an English court for your legal liabilities and you answer to your conscience and your fellow citizens for your morality. The Government has no business enacting legislating a test that effectively enquires into taxpayers’ morality.
You ignore:
a) that law has gaps, which are unavoidable
b) tax and other law overlaps in ways that cannot always be anticipated e.g. IFRS v UK GAAP
c) There are gaps between states that need be addressed
Your view is rose tinted
Or deliberately blind
Either way its deficient if we do wish to uphold the rule of law – of which a GAAR would be a part