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

The following Tax guidance 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
  • What is abusive?
  • Established practice defence
  • Pre-commencement arrangements may help to demonstrate non-abusiveness
  • Taxpayer safeguards
  • Interaction with APNs
  • Interaction with penalties for enablers of defeated tax avoidance schemes
  • GAAR penalty
  • more

FORTHCOMING CHANGE relating to the GAAR: Finance Bill 2019–20 makes various amendments to the GAAR, generally with effect from Royal Assent (see News Analysis: Draft Finance Bill 2019–20—Tax analysis—Technical and procedural amendments to the GAAR).

In summary, FB 2019–20:

  1. introduces a new ‘protective GAAR notice’ to replace the existing rules on provisional counteraction notices (PCNs)—although a protective GAAR notice must be given within the normal assessing time limit, once it has been issued, there is (unlike the 12-month time limit applicable to PCNs) no time limit by when HMRC must complete its enquiries. In addition, a protective GAAR notice cannot be given if a PCN has already been issued

  2. removes a potential anomaly whereby if HMRC decided not to (or was unable to) pursue the GAAR, it was arguably prevented from recovering the tax using non-GAAR technical arguments—this change is occasioned by the removal of the PCN rules

  3. changes the mechanics of pooling notices (including to the definition of ‘equivalent arrangements’) and binding notices to ensure that they operate in a way which is consistent with the new protective GAAR notices, and

  4. changes the way in which the 12-month period for assessing GAAR penalties is defined, so that it begins to run once any adjustments under the GAAR are final

The general anti-abuse rule (the GAAR) applies:

  1. with effect from 17 July