The GAAR - An anti-avoidance rule in all but name

The GAAR recommended by the Aaronson Study Group was restricted to highly artificial and abusive avoidance schemes.

The actual GAAR is capable of being read as a wider general anti-avoidance rule because its crucial filter is based on reasonableness, not artificiality. As a result, it risks introducing considerable uncertainty into normal tax planning and adversely affecting the attractiveness of the UK as a destination for inward investment. The Guidance is a valiant attempt to reduce that uncertainty but, because avoidance is treated by HMRC as inherently unreasonable, it ultimately fails in that objective.

This article first appeared in The Tax Journal.

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