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September 19, 2013
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General Anti Abuse Rule (GAAR) FA 2013 - An Introduction

The General Anti Abuse Rule (GAAR) was introduced in the Finance Act 2013 and takes effect from 17 July 2013.

A key issue for any advisors providing tax planning advice is now whether the strategy suggested is "abusive".

If it is and HMRC are effective in implementing the GAAR the tax result of the transactions will be deemed to be what would have happened should a reasonable course of action been taken.

All other tax rules will continue to apply.  In effect the GAAR will be HMRC's "back stop", if they consider the tax planning to be too good to be true and no other rules can charge the planning to tax in the way that HMRC would consider to be appropriate; given the intention of the legislation in question.

HMRC's website provides guidance about the way that the GAAR will be applied.  There are also a number of examples in the guidance about when HMRC say that they would seek to apply the GAAR.  The examples are important because they are given weight as they have been reviewed by the GAAR Advisory Panel.

More detail regarding the application of the GAAR will follow.

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