ICA Conference: GAAR threat

A senior manager at the Inland Revenue has warned that general anti-avoidance rules are not dead and buried and hinted that they could be introduced in the next parliamentary session, writes Nick Huber.

The government ditched the idea of a GAAR in the last Budget to the relief of the accountancy profession. Tax experts fear a GAAR will lead to uncertainty during business transactions, blurring the line between tax planning and evasion.

But Bob Cresswell, who heads the Revenue’s special investigations section, told the conference: ‘The absence of a GAAR does not mean that the Revenue and chancellor are not concerned about it.’

In response to concerns that a GAAR would give the Revenue unlimited power, he added. ‘If a GAAR were to come up again, there would be checks and balances in the legislation to address these concerns.’

Tax experts also warned of an Inland Revenue clampdown in other areas of taxation. Speaking about the future of tax practices, Mark Lee, a tax partner at BDO Stoy Hayward, warned that tax advisers should expect a substantial increase in the number of self-assessment tax enquiries issued by the Revenue.

‘The Revenue’s powers of discovery have been greatly extended over self assessment,’ he said. ‘Self assessment is now two to three years old and the Revenue can afford to go back over the early years.’