Print

HMRC have issued a policy paper ‘Technical and procedural amendments to the General Anti-Abuse Rule’ on proposals for HMRC to issue notices to taxpayers refusing to co-operate with them by withholding information about tax arrangements.

The General Anti-Abuse Rule (“GAAR”) took effect from 17 July 2013 to counteract ‘tax advantages arising from tax arrangements that are abusive’. Tax arrangements exist where obtaining a tax advantage is ‘one of the main purposes’ of the arrangements.

The current process for pursuing abusive tax arrangements under the GAAR gives HMRC a fixed 12 month window to gather information about the arrangements and consider whether to continue with a GAAR challenge. HMRC consider that some taxpayers are deliberately drawing out this process in the hope that the window will expire.

The policy paper, together with draft legislation as part of Finance bill 2020, allows HMRC to issue a new GAAR notification (protective GAAR notice) where they deem that the taxpayer is deliberately refusing to co-operate with HMRC and have withheld information in attempts to prevent HMRC from making a decision whether GAAR enquiries should be pursued or not.

Links to our guides:

General Anti-Abuse Rule – GAAR (subscriber version)

Penalties: GAAR

External links:

‘Technical and procedural amendments to the General Anti-Abuse Rule’