General Anti-Abuse Rule (GAAR)
As widely anticipated, the Government announced that it intends to accept the recommendation of the Aaronson report for the introduction of a narrowly-focussed General Anti-Abuse Rule (GAAR).
Who will be affected?
A consultation document will be released later this year, with the intention of introducing the new rule next year. It will apply to income tax, capital gains tax, corporation tax, petroleum revenue tax, NIC and SDLT.
The GAAR will apply from April 2013.
Our view is that a narrowly-focussed GAAR, which targets transactions with the sole purpose of avoiding tax should cut down artificial, aggressive schemes, without adversely affecting business. A wider GAAR would simply add uncertainty and would not be helpful, either for HMRC or for business.