I'm always pleased to find common ground with people.
On page 16 of this weeks Accountancy Age Richard Mannion, national tax director of Smith and Williamson (a firm of accountants that specialises in high net worth individuals if ever one did) calls for a General Anti Avoidance Rule (GAAR) for the UK.
Now, I admit I want a general anti avoidance principle (GAAP), not a rule (rules are right of fashion Richard - accountants abuse them) but that apart we're on a wavelength, even if our reasoning has little in common.
But let's be clear. Such a rule has to be clear. It would have to say:
If any step is inserted into a transaction with the sole or main intention of securing a tax advantage which would not otherwise be secured then that step in the transaction shall be ignored for taxation purposes and the desired benefit shall be denied.
And, to avoid the problems that Canada has encountered, in determining whether a tax advantage is being sought or not, the definition of such an advantage has to be internationally, and notionally based. Then we're onto a winner.
And I'd be 100% happy with the Revenue having to give clearances for transactions on this basis. Mind you, in my experience almost no one actually does the deal they seek clearance for, so they're not worth a lot. But published clearances would help all taxpayers work out what is, and is not acceptable. Pre-rulings would stop all the nonsense accountants come up with, like them asking whether paying into a pension is caught by a GAAR, which they raise purely to obstruct progress.
There's one final thing. Since the above rule is easy to work out for yourself (after all, you know your intentions) if you want a clearance you'd have to pay for , which would overcome the funding problem for this arrangement on the part of the Revenue. And it will probably be a lot cheaper and more reliable than counsel's opinion.
Bring it on, as I think some people say.
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Sorry Richard, but I cannot see that Richard Mannion is calling for a GAAR in the AA article. If he was, it would have been page one news, surely?
Andrew
Well, I see your point if you’re saying that the meaning of the article is hard to determine. I was being generous and assumed it was not a standard whinge but actually had a positive purpose. In that case I concluded he was in favour of a GAAR to resolve the issues he’d prviously addressed but was worried it would not be properly serviced.
Perhaps I was being too generous. Maybe it is after all another pointless and poorly argued whinge by the profession after all.
Richard
Mannion seems to be prefacing a resurfacing of GAAR and may well be seeking to get HMRC to tip its hand. If they’re going to do this, then it should be a total surprise to advisors. That would have the advantage of sending a very clear and unequivocal signal that government is absolutely serious about this thing. Anything else is likely to lead to another furiopus round of ‘tax planning.’
It would have to counterbalance that in some way to avoid total outrage. Maybe demonstrate it is equally committed to providing systems that work? Get real taxpayers and advisors to have a direct and public conduit where they can express their concerns?
This and other sites are demonstrating that people who care can engage in a considered debate about how to turn wishes into reality. The fact these issues are increasingly becoming part of the mainstream agenda should be enough to get people of power to recognise the mutual value that can be derived.
If HMRC does that, then it is in pole position as a truly progressive organisation.
I am interested in the above issue and would like to know whether such an anti-avoidance rule been set up in the UK internal law since this article (i.e. besides the OECD global rules) ? Else, are preliminary discussions of the government on this subject available somewhere?
Thank you very much in advance for your help.
Emilie
No advance in the UK as yet
No known discussions in progress either
Richard
Richard,
Thank you very much for your prompt answer.
Emilie
Richard,
I am a final-year undergraduate majoring in Finance at Anglia Ruskin, as part of my thesis, I would like to know what are the major aguments for and against a GAAR from your point of view?
RSVP soon!
Emilie
In here http://www.taxresearch.org.uk/Documents/TaxCodeofConductFinal.pdf
Hope that helps
Richard