CIOT looking forward to contributing to GAAR study

The Chartered Institute of Taxation (CIOT) has responded to the setting up of a study¹ to look at the practical aspects of a General Anti-Avoidance Rule (GAAR), saying that it is looking forward to having the opportunity to contribute to the study group’s work.

John Whiting, CIOT Tax Policy Director said:

“The CIOT is very willing to engage constructively in the debate around a GAAR. We set out our views in a letter to the Government in September and look forward to making them to the study group.

“We are happy to examine the idea of a GAAR, although many of the underlying concerns that existed when this was looked at in 1999 remain. To provide certainty, a clearance mechanism would be needed; to provide fairness, some of the existing clutter of anti-avoidance rules would have to be abolished. If a GAAR is to be introduced, it should be part of a general reform of anti-avoidance law and not simply as an additional layer.

“I hope the study will look closely at international experience of the GAAR which has been quite mixed.

“Much has changed since a GAAR was last looked at: we have the successful disclosure regime; we have ‘TAARs’ (Targeted Anti-Avoidance Rules) and we have the Courts taking a much stronger line on avoidance. Given all of these, we cannot see that there is an obvious gap for a GAAR to fill.”

Notes to Editors

1. The Exchequer Secretary, David Gauke MP, announced in a written statement on Monday 6 December that he has asked Graham Aaronson QC to lead a study into a General Anti Avoidance Rule (GAAR). The statement states that: “This study will consider whether a GAAR could deter and counter tax avoidance, whilst providing certainty, retaining a tax regime that is attractive to businesses, and minimising costs for businesses and HMRC. The Government is committed to predictability and stability for the UK tax system, and would not introduce a GAAR without further formal public consultation.” Further details can be found on the Treasury website.

2. Countries with a GAAR include Canada, Hong Kong, South Africa, New Zealand and Australia.

3. The comments of the CIOT on the consultation on a GAAR, sent to HMRC on 15 September 2010, are available to download from: http://www.tax.org.uk/tax-policy/public-submissions/2010/GAAR-CIOTfinalcomments