Tuesday, November 22, 2011

Tax scheme warning of the week - from the GAAR study report

I was especially taken by para 5.43 of the GAAR study report to which I referred in my last blog post:
I [Graham Aaronson QC, the author of the report] therefore see no unfairness in applying the GAAR to an arrangement which is not yet completed before the date when it comes into force; and it would in my view be appropriate to do so.
Is it just wishful thinking on my part? This strikes me as a warning to anyone who continues to promote 'abusive', 'artificial', 'egregious' or 'unacceptable' tax schemes (as referenced in the report).

The General Anti-Abuse Rule (GAAR) has yet to be finalised or to enter the staute books. However the GAAR's guardian has set out a clear warning that it should be capable of operating retrospectively. You have been warned!

Do you agree?

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  1. Because retrospective legislation would breach the Human Rights Act. A taxpayer has the right to certainty about the tax laws in place on a given day before making a decision regarding his/her tax affairs.

  2. Sorry 'anonymous' but I doubt your references to HRA or to 'certainty' are relevant here.

    No retrospective legislation would be involved. It's simply that the Courts MAY choose a different interpretation to that which Counsel anticipated when 'blessing' the scheme. It happens all the time. If the law was that clear (and certain) there wouldn't be an issue.