THE LIKELY INTRODUCTION of a general ‘anti-abuse’ rule has met with a muted response from the tax profession.
Already well-trailed prior to the Budget, the biggest concern among the professional community is that of where the lie will be drawn that tips advice beyond an acceptable line.
DLA Piper tax partner Richard Woolich said that while there was good news about business taxation on the whole, it must be kept in context of the looming GAAR. “…We fear that the introduction of the GAAR may detract from this by introducing uncertainty into the system and stopping not just aggressive avoidance, but sensible and prudent structuring,” said Woolich.
BDO tax manager Ross McKay was more philosophical about the GAAR consultation.
While it was likely to “throw a net” over tax avoidance schemes, concerns of it capturing ‘tax mitigation’ rather than aggressive tax schemes should hopefully be covered in the consultation. “Hopefully that will be weeded out,” said McKay.
Chris Morgan, head of tax policy, at KPMG in the UK, said: “Protecting tax revenues by tackling artificial avoidance is clearly a priority for the government, and KPMG supports a fair and competitive tax system. However, while the overall aims of a GAAR are clear, it can be difficult to apply in practice.
“If it is limited to stopping transactions with no business purpose, the GAAR should be relatively easy to apply. The difficulty arises where it also affects commercial transactions which are perceived to include unacceptable tax driven steps.”
Chris Sanger, head of tax policy at Ernst & Young, said: “Whilst confirmation that the implementation of a GAAR may not come as a surprise, how this will be achieved will continue to be a cause for concern.
The future consultation will need to clearly set out the government’s proposed approach and avoid introducing significant uncertainty into the tax regime.
“Businesses will be closely watching any draft legislation to see whether the proposals have the potential to develop and expand in scope, beyond Aaronson’s original intent.
“This remains a delicate area, where the Government needs to be wary of introducing uncertainty that could undermine the UK’s competitiveness.”
Committee expresses concern about costs to businesses and April 2018 implementation date
Andrew Tyrie airs views on the Finance Bill, 'Making Tax Policy Better' report, and Brexit
Top 25 firm HW Fisher & Co has acquired London firm Rhodes & Rhodes
Top Ten firm RSM has appointed Nick Blundell as its head of corporate tax in Birmingham