Treasury steps up anti-avoidance plans

The Treasury and taxman are ploughing on with plans for a one-size-fits-all
anti–avoidance rule, despite opposition from individuals, businesses, advisers
and even an accountant MP.

Ever since the idea of a General Anti-Avoidance Rule (GAAR) was unveiled by
the Labour government there have been warnings from the profession about the
ramifications of such a plan – namely that it would it raise significant
uncertainty as to whether activities seen as legitimate planning will be treated
as tax avoidance. It could leave accountants poten- tially being taken to task
by HM Revenue & Customs for advice honestly given, but treated as helping
their clients sidestep their tax obligations.

In efforts to preserve the UK’s tax take, this further blurring of the lines
will not only affect the 4.8m SMEs which form the foundation of the UK economy
but also any individuals or new businesses thinking about a move to the UK,
advisers say.

In kicking off the informal consultation this month, HMRC said it will be
exploring “whether there is a case for developing a general anti- avoidance
rule. This will be part of wider work on improve- ments to the tax policy making
process. “However, advisers maintain the GAAR will lead to uncertainty for
individuals and businesses.

Even MPs have been at loggerheads over the prospect of the GAAR. One claimed
that top accountants’ primary objective was to help clients sidestep their tax

Lib Dem MP John Pugh suggested last month that the life of some City
accountants “is almost entirely dedicated to some form of tax avoidance or tax
planning whatever they want to call it”.

However, Conservative MP Nigel Mills, an accountant, hit back at the claims,
warning that it would damage efforts to spur inward investment to the UK and
keeping entrepreneurs and businesses within our borders. “A general
anti-avoidance rule in principle may not be a brilliant way of doing that,”
Mills warned.

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