The GAAR Advisory Panel (GAP) has published its first Opinion Notice, ‘Employee rewards using gold bullion’. It considers the consequences of remunerating employees by means of gold bullion held in an Employee Benefit Trust. This is the first published opinion of the GAP.
Like the opinion of the Adjudicator General for the ECJ, it is not legally binding, but the Tribunal must take it into account if the case is taken that far.
The opinion itself is in three parts, reflecting the position of the employer and each employee.
The GAAR is structured in the form of a “double-reasonable test” – it only bites if the arrangements “cannot reasonably be regarded as a reasonable course of action”. Where the GAAR does apply, penalties of up to 60% of the counteracted tax can be levied over and above any penalties due under the normal rules.
The GAP’s opinion is that the provision of bullion to employees is not a reasonable course of action.
Normally, the GAAR should be invoked after a technical challenge (i.e. arguing it does not work) has been tried and failed, but HMRC can (as in this case) approach the GAP where the arrangements are “so clearly abusive that … it would be appropriate…”