 New tax anti-avoidance proposals will reduce grey areas – but achieving tax certainty will take years
21 November 2011: PKF Accountants & business advisers welcomes the Aaronson report on introducing a general anti-avoidance rule (GAAR) to the UK tax system but warns that taxpayers face many more years of uncertainty before a GAAR is working smoothly and widely understood.
Lisa Macpherson, national tax director at PKF, comments: "The illustrative draft GAAR set out in the report is an excellent starting point but there are clearly many issues that will take years to resolve. Even if the Government were to adopt the suggested rules without any amendment, there are concepts that will need to be clarified and developed over time. For example, there are many mentions of ‘reasonable’ but this has no legal definition in the context of tax planning – it all depends on the circumstances."
The Government had tasked Graham Aaronson with assessing whether or not introducing a GAAR would be beneficial to the UK tax system. Aaronson and a committee of senior legal figures broadly endorsed the idea of introducing rules that block ‘abusive’ tax arrangements but not a blanket rule that would undermine ‘the ability of business and individuals to carry out sensible and responsible tax planning.
Lisa Macpherson adds, "Taxpayers who, for example, want to buy or sell a business in the most tax-efficient way that the law allows should not be prevented from doing so. However, the proposals allow HMRC to suggest alternative transaction arrangements that incur more tax and, therefore, are less ‘abusive’ in its view. We hope that this element of the proposals will not be adopted."
"Overall, the suggested safeguards and other procedural proposals contained in the report will go a long way to answer the concerns of advisers and their clients. Setting up an independent expert Advisory Panel, as the report suggests, would also give taxpayers comfort that the GAAR will be applied fairly. Publishing the advice given by such a panel in different circumstances will be vital to building understanding and certainty for taxpayers over time. As there are so many grey areas in UK tax law, the quicker this process starts the better."
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For further information, please contact: Andy Konieczko, 020 7065 0537, andrew.konieczko@uk.pkf.com
Notes to Editors:
1. PKF (UK) LLP is a leading firm of accountants and business advisers with more than 1,500 partners and staff operating in 23 offices in the UK mainland firm, incorporating a wholly-owned financial planning company and associated offshore practices. The firm specialises in advising growing and entrepreneurial/owner-managed businesses, AIM and fully listed companies, and also has extensive experience in the public and not-for-profit sectors. Principal services include assurance and advisory; taxation; consultancy; corporate recovery and insolvency; corporate finance and forensic. The firm has particular expertise in advising sectors such as hotels and leisure; mining and resource; public sector; real estate and construction; professional practices; not-for-profit; and medical. The firm’s web site is www.pkf.co.uk
2. PKF (UK) LLP also offers financial services through its FSA authorised company, PKF Financial Planning Limited. PKF (Isle of Man) LLC is a limited liability company registered in the Isle of Man. PKF (Channel Islands) Limited is incorporated in Guernsey.
3. PKF (UK) LLP is a member firm of the PKF International Limited (PKFI) network of legally independent member firms. The PKFI member firms have around 2,200 partners and more than 21,000 staff in around 125 countries.
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