Text d: Business

Treasury sources said that the Government will adopt the General Anti-Abuse Rule (GAAR) outlined in a recent report by Graham Aaronson QC. A consultation is expected to be announced in the Budget with a view to bringing in new legislation next year.

Businesses have traditionally been wary of a GAAR because it complicates tax planning. Under a GAAR, companies have to disclose their tax arrangements in advance and schemes can be shut down. Recently, the Treasury raised concerns by closing a loophole retrospectively, costing Barclays more than £100m.

Chris Sanger, global head of tax policy at Ernst and Young, said: “Businesses will be closely watching any details to see whether the proposals have the potential to develop and expand beyond Aaronson’s original intent. This remains a delicate area, where the Government needs to be wary of introducing uncertainty that could undermine the UK’s competitiveness.”

Mr Aaronson tried to address such concerns by recommending an “anti-abuse” rule rather than “anti-avoidance”, which would limit the scope of its application. “A general anti-abuse rule narrowly targeted to deter such schemes, while not affecting responsible tax planning, should lead to a fairer, more principled and ultimately simpler tax system,” he said.

Cracking down on tax avoidance is expected to be at the heart of the Chancellor’s Budget, which he said on Sunday would be “a Budget for working people”. Speaking on the BBC’s Andrew Marr Show, George Osborne pledged to “come down like a tonne of bricks” on people who used offshore companies to avoid Stamp Duty on property purchases. Closing that loophole, which allows buyers to dodge all of the 5pc rate, is expected to raise up to £500m.

http://www.telegraph.co.uk/finance/budget/9151912/Budget-2012-Chancellor-George-Osbornes-tax-avoidance-crackdown-will-target-big-business.html (19 March 2012)

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