Aaronson recommends 'narrowly focussed' GAAR

A "NARROWLY FOCUSSED" general anti-avoidance rule (GAAR) would deter abusive tax avoidance and reduce the legal uncertainty surrounding schemes, Graham Aaronson QC's group has recommended.

The group, established by ministers, warned against a "broad spectrum" rule. A narrowly focussed rule would contribute to providing a more level playing field for businesses, build trust between taxpayers and HM Revenue & Customs and offer opportunities to simplify the system.

Aaronson said artificial and abusive tax avoidance schemes are "widely regarded as an intolerable assault on the integrity of the tax regime". He added: "A general anti-abuse rule narrowly targeted to deter such schemes, while not affecting responsible tax planning, should lead to a fairer, more principled and ultimately simpler tax system and I strongly recommend that such a rule should be introduced into our tax laws."

Exchequer secretary to the Treasury David Gauke (pictured) said: "We asked Graham Aaronson to consider whether a UK GAAR could deter and counter tax avoidance, while providing certainty, retaining a tax regime that is attractive to businesses and minimising costs for businesses and HMRC. We welcome the completion of his study and will carefully consider its recommendations against these criteria, alongside the feedback from businesses and tax professionals that we look forward to receiving."

The government will reply to the report in the 2012 Budget.