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HMRC’s GAAR guidance - continued

One key issue from HMRC’s guidance is that taxpayers are no longer free to reduce their tax bills by any lawful means as previously held by the Courts.

The GAAR ‘rejects the approach taken by the courts in a number of old cases to the effect that taxpayers are free to use their ingenuity to reduce their tax bills by any lawful means’.  Several examples given in the guidance support the principle that ‘abusive use’ of what would otherwise be lawful transaction will now not work, including:

  • the use of structures (such as unauthorised unit trusts) ‘in an inappropriate way to produce a tax result that is clearly contrary to the intended consequences of the law’ (D9); and
  • employers who enter into contrived and abusive arrangements to remunerate employees, by paying what would have been earnings by way of a reversionary interest in an offshore trust to escape NICs (D25).



Date: 9th May, 2013
Author: Cathy Corns


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