GAAR draft held up

Publication of a draft consultation document on controversial general to finance bill. anti-avoidance rules has been delayed and is not expected until late September – several months after its original planned date.

Observers blamed the delay on an Inland Revenue failure to provide sufficient resources for the initiative, as well as a postponement of ministerial meetings in the run-up to the government’s reshuffle.

Chancellor Gordon Brown said in his March Budget that the GAAR consultation document would be available by April or May. But the failure to provide any update has drawn fire from tax specialists.

John Whiting, a member of the English ICA’s tax committee and a PricewaterhouseCoopers tax partner, said the Revenue’s delay masked a failure to provide the number of ‘serious technical people’ required.

He said: ‘A quick political fix has come up against the idea that it is rather difficult when it comes down to it. There may have to be a major degree of resource reallocation required now.’

Whiting added that if the draft document is not released by the end of September, it could face serious problems in the consultation period prior to next April’s finance bill. He said: ‘We need serious time for debate.’

Malcolm Gammie, a tax barrister on the Tax Law Rewrite Committee, said the GAAR could be threatened by the government’s various taxation plans. He said: ‘The government is taking on a great deal. Minister Dawn Primarolo has taken on responsibility for nearly all tax issues; she may be finding it difficult.’

Nigel Eastaway, chairman of the Chartered Institute of Taxation’s technical committee, said many of the problems would be ironed out if the Revenue limited interference to transactions over #1m. He said the changes are due because the Revenue did not have the resources to deal with the current level. ‘The government said it hadn’t worked out what to say yet,’ he added.

A Revenue spokesman said that he could not give a date for the document’s release, but denied it had run into difficulties over resourcing. ‘Our people have always worked to tight deadlines to meet the demands of government,’ he added.

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