A scheme to reward employees with gold bullion exploited loopholes to gain an unexpected and unintended “tax win,” according to the first published opinion issued by the independent advisory panel examining cases in which HM Revenue & Customs considers that the general anti-abuse rule may apply.
HMRC invited readers to use the opinion to help them recognise “abusive tax arrangements.” The GAAR counteracts, by means of “just and reasonable adjustments,” tax advantages arising from abusive arrangements. Finance Act 2013 provides that tax arrangements are abusive if they “cannot reasonably be regarded as a reasonable course of action” in relation to the relevant tax provisions. This is the so-called double reasonableness test.
The panel noted that in broad terms, the GAAR “only comes into operation when the course of action taken by the taxpayer aims to achieve a favourable tax result that Parliament did not anticipate when it introduced the tax rules in question and, critically, where that course of action cannot reasonably be regarded as reasonable.” Read more: