General Anti-Abuse Rule (GAAR)

In December 2010 the Government asked Graham Aaronson QC to lead a study that would consider whether General Anti-Avoidance Rule (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 report by Graham Aaronson QC was published on 21 November 2011. The Government accepts the recommendation of the Aaronson report that a General Anti-Abuse Rule targeted at artificial and abusive tax avoidance schemes would improve the UK’s ability to tackle tax avoidance. The Government intends to bring forward legislation to this end in Finance Bill 2013.

GAAR consultation

On 12 June 2012, the Government published a formal consultation on a GAAR targeted at artificial and abusive tax avoidance. The consultation ran for 14 weeks until 14 September. The Government welcomes the positive engagement of all parties with the GAAR consultation and the time taken by respondents to provide helpful and thoughtful comments. A full response document was published with the draft legislation and draft guidance in December 2012.

Consultation on a general anti-abuse rule (HMRC website, opens in new window)

Statement on the draft GAAR from Graham Aaronson QC

Graham Aaronson QC, leader of the recent independent study into whether a GAAR would benefit the UK, has provided very positive feedback on the draft GAAR currently out for consultation. He described the draft GAAR as embodying ‘all the principles which we consider need to be incorporated in, and to form the framework of, a GAAR that would be appropriate for the United Kingdom.’

Links to his letter of support and the full supplementary report of his study group can be found below.