General Anti Abuse Rule (GAAR)

posted on March 1, 2013in the Blog Category

General Anti Abuse Rule (GAAR)

Tax Avoidance and the new General Anti Abuse Rule (GAAR) are very much flavour of the month and making consistent headlines most recently with Margaret Hodge MP in an article published in the Guardian.   Mrs Hodge states that tax avoidance costs £5b per annum and, before the Public Accounts Committee (presumably with the benefit of immunity from legal action) accused leading tax counsel as guys who “prostitute themselves to develop tax avoidance schemes” and also names a number of leading sportsmen and celebrities of avoiding tax, hinting that they have done something unlawful!   This begs many questions not least of which is why the government feel it appropriate to divulge a UK individuals tax affairs for public consumption which to my mind is a serious breach of privacy and human rights!   It is also worth noting that the vast majority of tax avoidance planning is entirely lawful. Our government have created a monstrously complex tax code that is virtually impenetrable to mere mortals. If planning opportunities abound by virtue of a tax code that doesn’t work then surely that code should be changed. Also, if tax planning takes place that is fully disclosed to HMRC why are they completely inept at taking steps to stop that planning. The K2 scheme that Mrs Hodge refers to was very widely publicised in the press by virtue of Jimmy Carr’s involvement in June 2012 and still, to this date, HMRC have done nothing to close the scheme.   To put tax planning into some form of context, the cost of Quantitive Easing and the resultant impact on pension fund yields has cost c. £34b, 7 times the cost of tax avoidance!   Interestingly it is alleged that Mrs Hodges family company, Stemcor,  'pays just 0.01pc tax on £2.1bn of business generated in the UK’ (source Wikipedia)!   Tony Collier, Managing Director

Written By: MBL

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