A1.543 Welsh GAAR

The UK General Anti-Abuse Rule described in A7.410, does not apply to the Welsh devolved taxes. Instead a separate GAAR applies to devolved taxes in Wales1. The Tax Collection and Management (Wales) Act 2016 (TCM(w)A 2016) was amended from 1 April 2018 to introduce a General Anti-Avoidance Rule (Welsh GAAR) for its devolved taxes. The devolved taxes are:


    •     land transaction tax


    •     landfill tax

These devolved taxes replaced stamp duty land tax and landfill tax on transactions taking place in Wales. See A1.540 for more on devolved taxation in Wales.

Welsh income tax is only partially devolved because the National Assembly for Wales can only set Welsh rates of income tax, although it has not done so and Welsh taxpayers continue to pay income tax at the same rates that apply to the rest of the UK (excluding Scotland). HMRC administers and collects Welsh income tax and the UK General Anti-Abuse Rule continues to apply to income tax.

Anti-avoidance not anti-abuse

The Welsh GAAR is generally considered to be wider in scope than the general UK GAAR because it is an anti-avoidance rather than an anti-abuse rule. It does not look at 'abusive tax arrangements' in the same way as the GAAR that applies in the rest of the UK (see A7.411). Rather, it applies when the obtaining of a tax advantage is 'the main purpose, or one of the main purposes, of an arrangement'2. The Welsh Revenue Authority's guidance on the Welsh GAAR warns that taxpayers should

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