The Government has set out proposals for new powers to tackle “artificial and abusive” tax avoidance that would enable HM Revenue & Customs to require people to change their tax arrangements.
The Treasury’s first consultation paper on the general anti-avoidance rule, which was announced in the March Budget and published this week, says the powers are designed to counter tax arrangements where the “main purpose or one of the main purposes” is to reduce tax liabilities.
Under the proposals, once those criteria are met, HMRC will be able to require “just and reasonable” adjustments to existing arrangements. It proposes the rule will apply to income tax, corporation tax, capital gains tax, fuel tax, National Insurance and stamp duty.
The paper also proposes extending the rule to cover inheritance tax and the bank levy, which the Treasury says is treated in the same way as corporation tax.
If a taxpayer disputes HMRC’s assessment and proposed changes, they can appeal through a tribunal or the courts, which will be able to make their own conclusions.
Treasury exchequer secretary David Gauke says: “The introduction of a GAAR will strengthen our anti-avoidance strategy, complementing the tools that HMRC already has at its disposal and acting as a deterrent to those engaging in artificial and abusive avoidance schemes.”
Axxis Financial Planning director Owen Wintersgill says: “This would enable the Government to crack down on big firms for abusive tax arrangements.”