Press release

Independent study on general anti-avoidance rule published

Graham Aaronson QC sets out his recommendation for the introduction to the UK tax system of a narrowly focused general anti-abuse rule.

Graham Aaronson QC has today set out his recommendation to the Government for the introduction to the UK tax system of a narrowly focused general anti-abuse rule (GAAR). 

The recommendation is published in the final report of Mr Aaronson’s eleven month review of the feasibility for the UK tax system of a GAAR. With the advice of a committee of tax experts, he has concluded that introducing a narrowly-focused GAAR would:

  • deter abusive tax avoidance schemes;
  • contribute to providing a more level playing field for business;
  • reduce legal uncertainty around tax avoidance schemes; 
  • help build trust between taxpayers and Her Majesty’s Revenue and Customs (HMRC); and
  • offer opportunities to simplify the tax system.

However, it warns against the introduction of a broad spectrum general anti-avoidance rule.

The report recommends that a GAAR should initially apply to the main direct taxes - income tax, capital gains tax, corporation tax, and petroleum revenue tax, as well as national insurance contributions. It sets out in detail how a GAAR could be introduced, and includes an illustrative draft rule. It also includes a summary of the views of representative bodies in the tax sector.

Speaking in response to the publication of the review’s recommendations, David Gauke, Exchequer Secretary to the Treasury, said:

The Government is committed to tackling tax avoidance. We asked Graham Aaronson to consider whether a UK GAAR could deter and counter tax avoidance, while providing certainty, retaining a tax regime that is attractive to businesses, and minimising costs for businesses and HMRC. We welcome the completion of his study and will carefully consider its recommendations against these criteria, alongside the feedback from businesses and tax professionals that we look forward to receiving.

Publishing the report, Graham Aaronson QC said:

Responsible tax planning is an essential feature in a complex tax regime, such as the UK’s. But artificial and abusive tax avoidance schemes are widely regarded as an intolerable assault on the integrity of the tax regime. A general anti-abuse rule narrowly targeted to deter such schemes, while not affecting responsible tax planning, should lead to a fairer, more principled and ultimately simpler tax system; and I strongly recommend that such a rule should be introduced into our tax laws.

The Government will consider the report in detail and the extent to which the proposals could add to HMRC’s existing legislative and administrative approaches and further reduce levels of tax avoidance. The Government will discuss the implications of the proposed rule with business and tax practitioners and respond fully at Budget 2012, setting out its plans for further, formal public consultation, if appropriate. 

The report is available on the GAAR section of the HM Treasury website.

Notes for Editors

  1. Graham Aaronson QC was commissioned by the Exchequer Secretary in December 2010 to lead a study into a GAAR. For further details, see the GAAR section of the HM Treasury website. The terms of reference can be viewed on the HMRC website (PDF on an external website, opens in a new window).

  2. The Government is committed to predictability and stability for the UK tax system, and would not introduce a GAAR without further formal public consultation.

  3. The Government is committed to tackling tax avoidance. Tackling Tax Avoidance, published at Budget 2011 sets out a clear strategy for the Government’s approach to protecting the Exchequer and maintaining fairness in the tax system.

  4. Interested parties can send comments regarding the GAAR Study recommendations to study.gaar@hmrc.gsi.gov.uk.

Non-media enquiries should be addressed to the Treasury Correspondence and Enquiry Unit on 020 7270 4558 or by e-mail to public.enquiries@hm-treasury.gov.uk

Media enquiries should be addressed to the Treasury Press Office on 020 7270 5238.

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