General Anti-Abuse Rule (GAAR)
HMRC has published updated guidance on the GAAR. This guidance now covers the purpose of the GAAR and provides examples that aim to cover the following broad categories:
• Situations covered by law where Parliament has given taxpayers a choice, such as the main residence section – which are fine.
• Long established practice – which is fine.
• Situations where the law deliberately sets precise boundaries – which is generally acceptable.
• Standard planning with some element of artificiality – which is a grey area.
• Transactions demonstrably contrary to the spirit of the law – which will be caught.
• Contrived or abnormal arrangements that produce a tax result not in any way consistent with legal effect and economic substance – which will also be caught.
It remains to be seen how this will work out in practice.
Date: 7th May, 2013
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