The Chartered Institute of Taxation (CIOT) has welcomed today’s launch of a government consultation document on a general anti-abuse rule (GAAR), but warned that much work is still needed on the proposals.
Patrick Stevens, CIOT President, said:
“The Government is right to be proposing a narrowly-targeted GAAR aimed at truly artificial schemes, as recommended by Graham Aaronson.
“It is important that the Government takes the proposal forward as the balanced package that the Aaronson report set out. The proposals contain important safeguards, including especially the Advisory Panel. However, there is much that still needs to be done to assure taxpayers that the new rule will not lead to uncertainty and unpredictability in tax, with all the damage that that could do to our economic competitiveness. The detail of this proposal, including the as yet unpublished schedule, will be crucially important.
“Artificial and abusive tax schemes bring the tax system into disrepute. If a GAAR can be framed that stops abusive practices without preventing legitimate tax planning – such as making use of tax reliefs deliberately put in place by government – or introducing damaging uncertainty that will be a very welcome step.”
The CIOT has warned1 that many of the examples of ‘tax dodging’ highlighted by the media and campaigners would not be caught by the GAAR. Thus the Government must be clear on what the GAAR will, and will not, achieve.
Notes to editors
- The CIOT, together with the Association of Taxation Technicians and Low Incomes Tax Reform Group, submitted a major paper to HMRC on the GAAR report earlier this year. See http://www.tax.org.uk/media_centre/LatestNews-migrated/GAAR_CIOT_ATT