The General Anti-Abuse Rule updated
The General Anti-Abuse Rule (GAAR) came into force in July 2013 as part of the arrangements. The GAAR aims to target tax abusive arrangements without damaging the overall competitiveness of the UK as a place to do business.
The GAAR applies to Corporation Tax (and amounts treated as Corporation Tax), Income Tax, Capital Gains Tax, Petroleum Revenue Tax, Inheritance Tax, Stamp Duty Land Tax, the Annual Tax on Enveloped Dwellings and National Insurance Contributions.
An independent Advisory Panel is in place to give opinions on specific cases and approve HMRC’s GAAR guidance. The Advisory Panel has provided guidance to HMRC and taxpayers on procedures for referred cases.
Some changes to the GAAR came into effect with the Finance Act 2016, effective 15 September 2016, which:
- allow HMRC to give provisional counteraction notices;
- introduce the concepts of ‘pooling’, ‘binding’ and ‘generic referrals’ where HMRC is applying opinions obtained from the GAAR Advisory Panel to users of equivalent arrangements;
- introduce penalties for people who entered into abusive tax arrangements on or after 15 September 2016.
A new factsheet CC/FS34 Compliance checks: General Anti-Abuse Rule and provisional counteraction notices has been published by HMRC. This factsheet mainly covers the GAAR and provisional counteraction notices.