The GAAR (General Anti-Abuse Rule) was introduced in 2013 and provides HMRC with powers to challenge arrangements deemed to be abusive. Penalties in relation to planning that is successfully challenged by the GAAR are in line with the standard penalty regime, based on the quality of disclosure and the behaviour of the individual concerned.
A new penalty of 60% of the tax due will be introduced in all GAAR cases that are successfully challenged by HMRC. The penalty will not apply in those cases where the taxpayer has settled with HMRC and corrected the tax position, prior to the arrangements being referred to the GAAR panel.
A number of small changes are to be made to the GAAR to improve HMRC’s ability to tackle marketed avoidance schemes.
The effectiveness of this new measure remains to be seen as it unclear whether any cases have yet to be referred to the GAAR panel. What is clear is that this measure is part of the Government’s move to clamp down on avoidance and is perhaps intended as a scare tactic to prevent further use of avoidance schemes which may be caught by this new penalty.