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How's your sense of smell?

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How's your sense of smell?  Empty How's your sense of smell?

Post by Rock Private Office Wed Jun 26, 2013 6:59 am

UK GAAR - How's your sense of smell?

To do whatever you possibly can to avoid taxes has long been perfectly acceptable in UK law. Lord Tomlin in the 1936 case of IRC v Duke of Westminster said the following:

“Every man is entitled if he can to arrange his affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be”

However, this is no longer the view of the UK Government or judiciary. From next April new legislation called the General Anti-Avoidance Rule (GAAR) is anticipated and aims to clamp down on perceived tax abusers.

The concepts of avoidance and evasion are frequently muddled but there is a distinction between the two. Tax evasion usually entails taxpayers deliberately misrepresenting their affairs with dishonest tax reporting. While tax avoidance involves compliance with the letter but not necessarily the spirit of the law, and this is what the Government is seeking to address.

The Disclosure of Tax Avoidance Schemes legislation introduced in August 2004 has gone some way to curtail the activity of overly ‘creative’ tax planners. However, HMRC is now looking for a way to ensure tax planning is strictly within the ‘intention’ of the law.

David Gauke, the Exchequer Secretary to the Treasury, suggested a “smell test” in a speech in July last year, he said: “Where the tax consequences of an arrangement are so clearly contrary to the intentions of Parliament, where the nature of the arrangements so clearly lack a commercial, non-tax rationale and where the result looks ‘too good to be true’, most reputable advisers would say that the arrangements stink – and stay well clear.”

But, we all have different senses of smell; so choose your adviser carefully!
Rock Private Office
Rock Private Office
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