Pictured: Sarah Moss
PKF Accountants & business advisers welcomes the Aaronson
report on introducing a general anti-avoidance rule (GAAR) to the
UK tax system but warns that taxpayers face many more years of
uncertainty before a GAAR is working smoothly and widely
understood.
Sarah Moss, Tax Partner at PKF, comments: "The illustrative
draft GAAR set out in the report is an excellent starting point but
there are clearly many issues that will take years to resolve. Even
if the Government were to adopt the suggested rules without any
amendment, there are concepts that will need to be clarified and
developed over time. For example, there are many mentions of
'reasonable' but this has no legal definition in the context of tax
planning - it all depends on the circumstances."
The Government had tasked Graham Aaronson with assessing whether
or not introducing a GAAR would be beneficial to the UK tax system.
Aaronson and a committee of senior legal figures broadly endorsed
the idea of introducing rules that block 'abusive' tax arrangements
but not a blanket rule that would undermine 'the ability of
business and individuals to carry out sensible and responsible tax
planning'.
Sarah Moss adds, "Taxpayers who, for example, want to buy or
sell a business in the most tax-efficient way that the law allows
should not be prevented from doing so. However, the proposals allow
HMRC to suggest alternative transaction arrangements that incur
more tax and, therefore, are less 'abusive' in its view. We hope
that this element of the proposals will not be adopted.
"Overall, the suggested safeguards and other procedural
proposals contained in the report will go a long way to answer the
concerns of advisers and their clients. Setting up an independent
expert Advisory Panel, as the report suggests, would also give
taxpayers comfort that the GAAR will be applied fairly. Publishing
the advice given by such a panel in different circumstances will be
vital to building understanding and certainty for taxpayers over
time. As there are so many grey areas in UK tax law, the quicker
this process starts the better."
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www.pkf.co.uk