A general anti-avoidance rule would have to work for the taxpayers not just against them, according to the Chartered Institute of Taxation.
In a statement on the current tax avoidance debate, the CIoT suggested it would be totally unfair if the GAAR was not extended to give taxpayers the ability to claim reliefs or exemptions which were intended, but seem to be denied by the words of statute.
With draft legislation for a GAAR intended for publication later this month, the CIoT recognised a GAAR may be inevitable, although a spokesperson for the institute said ‘targeted anti-avoidance measures’ would be preferable.
The CIoT also repeated calls for a clearance procedure to accompany any GAAR. A ‘GAAR must operate in a way that helps, not hinders, business decisions,’ said John Whiting, chairman of the institute’s tax administration sub-committee. ‘There must be properly resourced clearance procedures so taxpayers can be certain of their plans quickly.’
There was also a side-swipe at the idea of purposive legislation, which has been suggested as one method of tackling the tax-law rewrite. ‘The tax system must use clear words not intention,’ said a spokesman. ‘UK plc will be damaged if a GAAR introduces more uncertainty into the system.’
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