The general anti-abuse rule (GAAR)
The general anti-abuse rule (GAAR)

The following Tax practice note provides comprehensive and up to date legal information covering:

  • The general anti-abuse rule (GAAR)
  • Purpose of the GAAR
  • Key concepts relevant to determining if the GAAR applies
  • Tax arrangements
  • Taxes covered by the GAAR
  • GAAR extended to NICs on 13 March 2014
  • What is a tax advantage?
  • What is abusive?
  • Double reasonableness test
  • Consideration of all circumstances
  • More...

FORTHCOMING CHANGE: With effect from Royal Assent to the Finance Bill 2021 (FB 2021), it is expected that:

  1. HMRC will be able to apply the GAAR to a partnership, with counteraction taking place through the partnership statement and then carried through to the partners benefiting from the tax advantage (ie making the GAAR procedure work consistently with how HMRC conducts partnership tax enquiries and amends tax returns in respect of partnerships)

  2. the GAAR penalty will be levied on the partners and based on the value of each partner’s counteracted advantage, and

  3. the representative member of a partnership would benefit from the existing safeguards, such as the right to make representations, the right to appeal (where relevant) and the GAAR panel’s role in providing an independent review

The general anti-abuse rule (the GAAR):

  1. counteracts (by the making of adjustments on a just and reasonable basis by HMRC or the taxpayer)

  2. tax advantages that would, ignoring the GAAR, arise from abusive tax arrangements, and

  3. has applied since 17 July 2013 (the date of Royal Assent to the Finance Act 2013 (FA 2013)) except that, in respect of National Insurance contributions (NICs), it has only applied since 13 March 2014

This Practice Note:

  1. discusses the purpose of the GAAR

  2. sets out when the GAAR applies and considers:

    1. the meaning of tax arrangements and tax advantages

    2. the taxes covered by

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