14th June 2012
The Government has launched a consultation on a new general anti-abuse rule (GAAR) designed to tackle what it terms 'artificial and abusive tax avoidance schemes'.
It follows an independent review by Graham Aaronson QC in 2010 that concluded such a rule would deter avoidance, create a 'more level playing field for business' in the UK, and minimise costs for both businesses and HMRC.
The rule is to be introduced in 2013, as announced in this year's Budget, and will affect a wide range of taxes.
David Gauke, Treasury secretary, said: "The introduction of a GAAR will strengthen our anti-avoidance strategy, complementing the tools HMRC already has at its disposal and acting as a deterrent to those engaging in artificial and abusive avoidance schemes. The rule we are consulting on from today will effectively tackle such schemes, while minimising the impact on the vast majority of taxpayers who pay a fair share."
Tax abuse was one of the Government's key points in March's Budget, described by Chancellor George Osborne as 'morally repugnant', and forms part of its drive to increase its tax revenues by £1 billion in the next five years.
The consultation document said the GAAR was expected to affect 'a small number of relatively affluent taxpayers.'
The Government has extended original recommendations that the rule should apply to direct taxes and national insurance so that it will also cover income tax, corporation tax, capital gains tax (CGT), stamp duty land tax (SDLT), inheritance tax and taxes on fuel.
The consultation also sets out that the GAAR would allow the Government to consider including further taxes if appropriate, leaving some tax advisors concerned about the potential uncertainty this could create.
The Chartered Institute of Taxation (CIOT), that had submitted a report to HMRC on the proposals earlier in the year, welcomed the consultation but insisted the new rule should not lead to 'unpredictability' in taxes, which could damage the country's economic competitiveness.
President of the CIOT, Patrick Stevens, said: "The detail of this proposal, including the as yet unpublished schedule, will be crucially important."
As laid out in the consultation, the Government will establish an advisory panel of both HMRC and business representatives to give opinions on the GAAR proposals, with the consultation closing on the 14 September.