THE PROPOSED general anti-abuse rule designed to curb tax avoidance will give HM Revenue & Customs too much power, according to the Confederation of British Industry.
The rule is intended to stop "artificial" and "egregious" tax planning schemes, while allowing for tax reductions where there is an obvious commercial purpose.
But the CBI said that, while it supports plans to tackle tax avoidance, the rule has been constructed in such a way as to undermine government efforts to make the UK's tax system the most competitive of the 20 leading economies, reports the Financial Times.
CBI director-general John Cridland (pictured) expressed concerns that the latest proposal is "just too broad", and that it "could affect not just abusive transactions but also straightforward tax management".
He added his voice to the criticism over the accountability of the proposed panel, which would assess whether a scheme falls foul of the rule.
"We are ... concerned about the independence of the GAAR panel, which currently has HMRC acting as judge and jury", he said.
On Friday, John Overs, head of corporate tax at law firm Berwin Leighton Paisner, said: "Well-written laws should function properly without the need to be supplemented by the opinions of an extra-judicial body such as the advisory panel and guidance that is not approved by parliament."
The whole point of a GAAR is to defend the UK Government's fiscal position. HMRC will therefore need power to make it work. Every other country with a GAAR with teeth has had fiscal surplus' with money spare for rainy days (Oz Canada, Hong Kong). What the UK fails to realise is that tax is not just another bit of law, it's fundamentals are built on economics, with a law and accounting overlay.
I was disappointed by Graham's limited choice of consultation rep bodies - not a single economic body.
Brits complain that the government isn't doing enough for growth. To get growth, the Government needs start by getting rid of "lawyers" of red tape out of the way (e.g Singapore). As well as getting rid of the law that target's foreign tax avoidance (sorry, but when does stopping the undercutting of another country's tax base help the UK - Argentina won't thank the UK). John's critisim doesn't wash with me, there are no powers really given here, even the penalties are just a slap on the wrist.
Posted by: alui, 18 Sep 2012 | 11:54
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