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This is a freeview 'At a glance' guide to penalties and the General Anti-Abuse Rules (GAAR).

What penalties are due under the General Anti-Abuse Rules (GAAR)? How much are they and when do they apply?

At a glance

Finance Act 2016 introduces a penalty when a taxpayer submits a return, claim or document to HMRC which includes arrangements which are later found to come within the scope of the General Anti-Abuse Rules (GAAR).

HMRC will give notice that a taxpayer may be within the scope of the GAAR, and the taxpayer will be given the opportunity to correct their tax position up until the point that their arrangements are referred to the GAAR Advisory Panel.  If they do correct their tax position they will not be liable to a GAAR Penalty.

In order for a penalty to apply HMRC must have issued either:

The new penalty applies to transactions entered into on or after 15 September 2016 (the date that the legislation received Royal Assent).

It applies to all taxes except VAT and National Insurance.

Legislation is also introduced which:

Small print

Legislation is included in the 2016 Finance Act as follows:

Existing GAAR legislation is in Finance Act 2013 schedule 43.

Existing penalty rules are primarily contained in Finance Act 2007, schedule 24, but Section 158 FA 2016 also refers to penalties issued under:

Useful guides on this topic

General Anti-Abuse Rule (GAAR) (subscriber version)What is the General Anti-Abuse Rule (GAAR)? When does it apply? 

Penalties: Serial Tax Avoidance
The Serial Tax Avoidance (STA) legislation was introduced by Finance Act 2016 to penalise taxpayers who repeatedly enter into abusive tax avoidance schemes.


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