The biggest anti-avoidance measure in the budget is an attack on disguised partnership arrangements, which HMRC are forecasting will raise more than £300 million a year, whilst the GAAR will raise a tiny proportion of that.
Now I have no problem with any attack on artificial arrangements - and if LLPs and partnerships are being used to pay people as partners who are really employees then I have no problem with HMRC tackling the issue. Except for the fact that I think they've always had that power. I can recall having correspondence on it with the Inland Revenue as was in the 1980s.
In that case I have several problems with this move. The first is that unless there is to be a presumption that all partners are employed (which seems to be the implication in the case of LLPs) then this is going to be very hard to police and I doubt that when HMRC are still facing massive job cuts that they will have the resources to police this.
Second, presuming partners are not self employed is going to irritate some very powerful lobbies. Start with all accounting and legal partnerships. They wont be happy. Expect a backlash.
Third, applying PAYE to an income that is not determined until a profit can be struck is going to be hard: I await to see the regulations. I hope some very sensible drafting is taking place to identify those, for example, guaranteed against losses or having a guaranteed income with a very small part variable based on profit being the target or the small business community in the UK will have good reason to think this is hitting the wrong target.
Last, this is hitting the wrong target! Very obviously the biggest employment abuse in the UK is not in partnerships but in limited companies, of which hundreds of thousands exist solely to get round NIC, which this government is entirely ducking as an issue and which would collect billions and not hundreds of millions a year if tackled.
So, tackle the abuse by all means, and make sure the regulations are well drafted. But please also tackle the much bigger issue of small company abuse if you are really serious about this George Osborne. Until then it is hard to consider this proposal as credible. I'd rate it a high risk for a u-turn, and that may be a shame.