The Treasury has announced the creation of a study group to look at a UK general anti-avoidance principle. As it says:
Graham Aaronson QC, today notified the Exchequer Secretary to the Treasury David Gauke, of the experts who will work on his study into a General Anti-Avoidance Rule (GAAR), and the areas they will cover.
This follows the Exchequer Secretary’s announcement in December that a study group would be set up to explore the case for a GAAR in the UK. This is part of the Government’s commitment to tackling tax avoidance and building sustainable defences to address long-standing avoidance risks.
Those working with Graham Aaronson in the committee are:
- John Bartlett
- Judith Freedman
- Sir Launcelot Henderson
- Lord Hoffmann
- Howard Nowlan
- John Tiley
Topics which the committee will look at include;
- consideration of existing experience with GAARs and other anti avoidance principles in other jurisdictions;
- what a UK GAAR could usefully achieve; and
- what the basic approach of a GAAR should be.
The study group will complete its work by the 31st October 2011 and will report its conclusions to the Exchequer Secretary.
It's got some good people on it, some of whom I know.
Let's hope it delivers.
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I have no doubt that the committee will deliver but whether the propose a GAAR remains to be seen. Frankly, I would not be surprised if they do not recommend a GAAR, as has been the case in previous review. With the amount of prominent jurists on the group (in particular Lord Hoffman) I feel the consensus may be tend towards letting the courts deal with anti-avoidance based on precedent.
A GAAR will give considerable power to whomever is entrusted the duty of deciding the spirit of the law. Our tax law is a complete mess. Recent so-called simplification has resulted in a jumble of drafting styles, sometimes so specific as to resemble a computer programmes and at other times, for example, requiring the reader to determine what a reasonable tax inspector would consider the taxpayer’s main purpose to have been. Without better legislation or an efficient pre-transaction ruling system the GAAR will give rise to great uncertainty which will disincentivise investment. A ruling system requires funding. All the committee needs to do to wreck the proposal is recommend an expensive pre-transaction ruling system. However, I don’t see how the appointment of Judith Freedman to this committee can be justified given her publicised sympathy for a GAAR.
@Will Jenney
You mean you want a committee to look at this all of whom oppose a GAAR?
Is that what you’re really saying? If so is there any credibility in your commentary?
As for improved legislation – of course we need it. Despite which most of us try to comply. So if checks are needed the taxpayer can pay for them. Why not? They pay for opinions now, after all
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@Will Jenney
“Spirit of the law” is a myth! The courts will not consider the spirit of law (and neither should HMRC, tax advisers etc). It is the intention of the legislature that will be critical.
@JayPee
That is the spirit of the law – what was it meant to achieve
Can’t you see that?
There is no conflict!
@Richard Murphy
Spirit of the law and intention of the legislature are not the same think, otherwise we would need have any cause to refer to the spirit of the law.
Spirit of the law implies an influence outside of the law as properly interpreted by the courts. Allowing Revenue to apply tax laws according to what they perceive to be the spirit of the law results in a lack of certainty for the taxpayer.
Ultimately the courts will decide what is the objective intent of the legislature as evidenced by the words used in the legislation. Spirit of the law is miles away from this.
@JayPee
So I wonder what you would do when the revenue come to read a piece of law and seek to interpret it so that it might be applied to the affairs of the taxpayer, which will not of course, exactly conform to the way in which the legislation was written
Are they to be automatons?
Is any exercise of judgement allowed?
Or are they simply to say we can’t work this out so we won’t bother?
You imply the latter because without some human interpretation of the law no tax will ever be collected and that is obviously ridiculous. In that case your suggestion is quite absurd, and I presume you know it. Of course there is a spirit of the law which seeks to interpret the purpose of the legislation that was created so that it may be applied to the circumstances found in real life. To suggest anything else is quite obviously wrong
You are being deliberately silly.
1. I would hope that revenue have sufficiently qualified people who are able to interpret legislation according to the accepted principles of interpretation. If revenue seek to apply legislation in a manner contrary to its objective interpretation I suspect they will find themselves in court promptly. I also recall that you have stated that HMRC draft legislation ob behalf of the government so should have the necessary skills to draft legislation in accordance with the will of parliament.
2. I have no problem with HMRC exercising judgement provided it is lawful. It is not for Revenue to adjudicate ion the law, that is for the courts to do. The same applies to taxpayers. Contrary to what you believe, most tax lawyers spend their working day, not devising artificial tax avoidance schemes, but applying tax law to sets of circumstances in order to advise their clients of the tax consequences. In doing this, they too have to exercise their judgment in applying and interpreting the law. Just like HMRC these lawyers have a wealth of tools to assist them in such interpretation and just like Revenue they get the interpretation wrong. The spirit of the law is never used as an interpretive tool.
3. I have never said that humans cannot interpret the law. What nonsense.
4. HoweverI would be most interested in how you (and others) would see “spirit of the law” used to interpret the purpose of legislation. In particular: how do you ascertain what the spirit of the law actually is? What evidence is available to support the spirit and how will you deal with conflicts (not ambiguity) between the spirit and what is written in legislation
@JayPee
I think all you are saying is you agree with me and that your first comment makes no sense
In which case I see no point in debating further
@Richard Murphy
No I dont agree with you because your thinking is totally muddled. Spend some time with Judith Freedman and perhaps you may come to accept that the concept of Spirit if the Law is complete nonsense and cannot exist in a democratic society.
@JayPee
Oh come on – Judith and I only agree on the need for a GantiP – after that she;s big firm lawyer / Oxford
And, let’s also be honest – she does talk about the spirt of the law, so do accountants, HMRC and others
Deny all you will – you’re just playing semantics for “what did the law mean and require”
According to private Eye Graham Aaronson QC spends all his efforts trying to overturn EU tax avoidance laws…