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UK tax law is specifically targeted rather than purposive: in tackling the exploitation of loopholes in the law, governments have legislated against individual avoidance schemes as and when these have come to light.  Often the response has been the creation of new schemes to circumvent the law, which in turn has seen further legislative action – an ‘arms race’ between the revenue authorities and Parliamentary counsel on one side, and on the other, taxpayers aided and abetted by the legal profession. 

Over the past twenty years many commentators have suggested having legislation to counter tax avoidance in general: by providing certainty as to the tax consequences of any transaction, a ‘General Anti-Avoidance Rule’ (GAAR for short) might dissuade the most egregious efforts to avoid tax, encourage taxpayers and legal counsel to redirect their energies to more productive activities and allow the authorities to simplify the law without fear of it being systematically undermined.

In the late 1990s the Labour Government consulted on a GAAR before deciding against the idea.  By 2003, evidence of the scale of tax avoidance – particularly schemes targeted at individuals working in the financial sector – rekindled interest in a GAAR, though in its 2004 Budget the Labour Government announced a new ‘disclosure regime’ as an alternative, whereby tax avoidance schemes would be required to be disclosed to the revenue departments.[1]  This note looks the debate on the case for a GAAR over these years, and the introduction of the regime for the Disclosure of Tax Avoidance Schemes – or ‘DOTAS’ as it is known.

In its first Budget in June 2010 the Coalition Government stated it would explore the case for a GAAR, and in November 2011 published the report of a study group, led by Graham Aaronson QC, commissioned to report on this question.[2] Mr Aaronson argued in favour of a ‘moderate’ rule ‘targeted at abusive arrangements’. The Government confirmed its plans at the time of the Autumn Statement in December 2012.[3] Provisions in the Finance Bill 2013 for the new General Anti-Abuse Rule were agreed, without changes, and the new rule came into force on 17 July 2013. A second Library paper discusses these developments.[4]

Notes :

[1]     HC Deb 17 March 2004 c329

[2]     Budget 2010, HC 61 June 2010 para 2.114; HC Deb 21 November 2011 cc2-3WS

[3]     Autumn Statement, Cm 8480 December 2012 para 1.178; see also, Budget 2013, HC 1033, March 2013 para 1.211

[4]     Tax avoidance: a General Anti-Abuse Rule, Commons Briefing paper CBP6265, 16 January 2020


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  • UK tax law is specifically targeted rather than purposive: in tackling the exploitation of loopholes in the law, governments have legislated against individual avoidance schemes as and when these have come to light. This note looks at the case that has been made recently for a general anti-avoidance rule, and the Coalition Government's introduction of a 'narrower' General Anti-Abuse Rule in 2013.