New anti tax avoidance measures mustn’t allow the taxman to pick and choose

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Anti tax avoidance measures must be balanced and not introduce unnecessary uncertainty according to the Law Society.

The Society has also called for any general anti avoidance rule (GAAR) to be accompanied by safeguards as recommended in a treasury-commissioned report published today.

The Society believes any GAAR should guard against unacceptable levels of HMRC discretion. Failure to include the proposed safeguards would render it unbalanced.

Ashley Greenbank, the chair of the Law Society’s tax law committee said:

“One of the Law Society’s concerns that arise in relation to the introduction of any GAAR is that it should not provide an unacceptable level of discretion to the revenue authorities in the interpretation of tax law. Taxpayers will not be well-served by the taxman being able to pick and choose, with GAAR applied selectively or unpredictably.

“The report contains some innovative proposals to address this issue which are worthy of further consideration; including putting the burden of proof on HMRC and setting up an advisory panel to review transactions.”

If a GAAR is introduced, in the Law Society’s view, it will also be important that it is accompanied by a programme to review and repeal many of the specific anti-avoidance rules that have been introduced in much recent legislation.

Ashley Greenbank praised the report as ‘a thorough and considered assessment of the issues’ likely to arise if a general anti-avoidance rule (GAAR) is introduced into UK law. The Committee met with members of the Study Group as part of the Group’s process for preparing the Report.

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