Is a General Anti-avoidance rule (GAAR) on the horizon?

An independent study on the feasibility of introducing a GAAR has now been published.  Graham Aaronson QC concluded that:

“a GAAR which is appropriate for the UK must be driven by an overarching principle. This is that it should target those highly abusive contrived and artificial schemes which are widely regarded as intolerable, but that it should not affect the large centre ground of responsible tax planning.”

A narrowly-focused GAAR would:

  • Deter abusive tax avoidance schemes
  • Contribute to providing a more level playing field for business
  • Reduce legal uncertainty around tax avoidance schemes
  • Help build trust between taxpayers and HMRC
  • Offer opportunities to simplify the tax system

The report does not advocate a broad based GAAR, so would not target genuine tax planning which has a commercial basis.  Its target would be “abnormal” planning, where a person enters into a complex scheme with the sole aim of avoiding tax.

However, the report does not advocate a clearance mechanism, which could instil a culture of uncertainty whenever a person enters into complex arrangements even if there is a clear commercial rationale.

It remains to be seen whether the recommendations of this report find their way into statute, but the fact that the report was commissioned further demonstrates HMRC’s seriousness in curtailing abusive tax schemes.


At Gabelle we do not ‘promote’ tax planning schemes; however, we are frequently called upon to critique schemes being punted at the clients of our professional clients.  In many cases schemes are woefully technically inadequate and we can advise accordingly.  In relation to others, although based upon more careful analysis, a common theme is that ‘grey’ areas are not sufficiently highlighted (sometimes on the basis that a ‘Counsel’s Opinion’ gives a positive view) and, more generally, that warnings that the scheme will almost certainly be enquired into by HMRC are given a low status (if made at all).

Our advice is always the same.  If a client is trying to circumvent the clear intention of the legislation and/or side-step a particular anti-avoidance provision, extreme care is needed; an HMRC enquiry is highly likely; and there can be absolutely no guarantee that any advantage will be achieved (quite the opposite in many cases).


If you would like Gabelle to review any tax scheme which is being ‘sold’ to your clients, please contact the TaxDesk on 0845 4900 509 and ask for Paul Howard.

If your clients have already entered into schemes which are now being enquired into by HMRC, ask for John Hood.