GAAR! Anti tax-avoidance rules almost here…

GAAR!

No, not the sound of tax lawyers dropping textbooks on their toes.

Rather, it is the new General Anti-Abuse Rule (GAAR).

The Government has now published a draft Finance Bill 2013 for consultation. The Bill will include a general measure to counteract abusive tax avoidance arrangements.

The GAAR will apply to income tax, corporation tax, capital gains tax, inheritance tax, petroleum revenue tax, stamp duty land tax and annual residential property tax with effect from 1 April 2013.

These schemes have been suggested for a while.

The problem is that accountants and tax lawyers spend their professional lives picking out the loop holes for their wealthy clients to take advantage off. Currently this ‘tax avoidance’ is legal and above-board

However, if the avoidance is taken too far, using artificial and abusive tax avoidance schemes, it can tip into ‘tax evasion’ which is a criminal offence.

The Government announced in its Budget 2012 that it had accepted the recommendation of the independent study by Graham Aaronson QC which had suggested the introduction of the GAAR.

So perhaps it will also be the sound tax avoiders make when caught.

On reflection, that’s not such a bad sound after all.

GAAR!

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