HM Treasury this week 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.
It is hard to argue with the tone and conclusions reached by
Aaronson. He recommends a moderate rule targeted solely at
purely abusive arrangements and is unequivocal that the
GAAR should not be broad enough to deter or counteract what he
calls the centre ground of sensible and responsible tax
planning; with the onus of proving that any planning was not
reasonable falling on HMRC. Aaronson's proposed GAAR would look
to identify and counteract tax planning with abnormal features
specifically designed to achieve a tax advantageous
result.
