Income Tax 2: Anti-Avoidance

Question 1

What is the General Anti Abuse Rule (GAAR)

Answer 1

Seeks to deter taxpayers from entering schemes to abuse tax system and promoters of such schemes

Question 2

What does GAAR give HMRC the power to do?

Answer 2

HMRC can set aside tax arrangements only if HMRC can prove:
- the arrangement cannot reasonably be regarded as a reasonable course of action

Question 3

How is the double reasonableness test under GAAR considered?

Answer 3

HMRC to obtain the opinion of an independent advisory panel regarding the reasonableness of any particular arrangement

Question 4

What remedy is there if a tax arrangement is found unreasonable under GAAR?

Answer 4

HMRC may ONLY make a tax adjustment which is:
- reasonable under the circumstances

Otherwise
- taxpayer may be in breach of statute for filling inaccurate tax returns