General Anti-Avoidance Rule

HM last month published its report on whether a general anti-avoidance rule ("GAAR") should be introduced into the UK tax system (the "Report"). The Report, written by a committee chaired by Graham Aaronson QC, concluded that a GAAR would benefit the UK tax system, provided it was limited in its scope.

While the Report recommends that where there is any reasonable doubt as to which side of the line any arrangement falls on, then that doubt is to be resolved in favour of the tax payer, taxpayers are likely to be cautious to make assumptions as to how any GAAR will be applied, particularly in the earlier years of its implementation.

The biggest test for taxpayers, therefore, will be in achieving the certainty that they require as to tax treatment of any given transaction, prior to putting it into effect.

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