Tax avoidance cases before the General Anti Abuse Rule (GAAR) Panel could be ‘pooled’ or ‘bound’ or placed under ‘general referral’ under new guidance measures aimed at increasing efficiency
The panel, headed up by former Allen & Overy partner Patrick Mears, was set up to adjudicate on schemes caught by the GAAR.
The GAAR was originally designed to catch and prevent contrived tax avoidance schemes by applying a test of how ‘reasonable’ tax arrangements are and whether they apply the rules in a way Parliament originally intended.
Under the guidance, where there are several arrangements that are equivalent to one another, it will be possible to ‘pool’ or ‘bind’ them together, so that the GAAR Advisory Panel’s opinions can apply to all of the equivalent arrangements.
The GAAR Advisory Panel’s opinions will then be applied to the similar cases. Additionally, where similar cases are identified after the GAAR Advisory Panel has given its opinion they may be ‘bound’ to the arrangements that the GAAR Advisory Panel considered.
‘This prevents the need for each case to be considered individually by the GAAR Advisory Panel,’ the guidance says.
Alongside that move, HMRC is permitted to make a ‘provisional counteraction of the tax advantage arising from a tax arrangement it believes is abusive’, without the prior approval of a designated HMRC officer.
Since its formation in 2013, the GAAR Panel has yet to consider any cases, although the GAAR penalties legislation applies to all tax arrangements entered on or after 15 September 2016.
Tax avoidance: General Anti-Abuse Rule guidance - latest version is available here.
