Reply to: Autumn Statement 25 November 2015 - reaction/thoughts/rants/

[LandRover]

GAAR is not retrospective for schemes prior to its introduction in July 13

https://www.gov.uk/government/public...ti-abuse-rules

The General Anti-Abuse Rule (GAAR) is part of the Government’s approach to managing the risk of tax avoidance. It has been introduced to strengthen HM Revenue and Customs’ (HMRC’s) anti-avoidance strategy and help HMRC tackle abusive avoidance. The GAAR legislation defines what are, for its purposes, tax arrangements that are abusive.

But just because something isn’t covered by the GAAR doesn’t mean it won’t be tackled in another way. HMRC will continue to tackle tax avoidance using existing anti avoidance methods as well as the GAAR, where appropriate.

The GAAR applies to the following taxes from 17 July 2013:

Income Tax
Corporation Tax (including amounts chargeable or treated as Corporation Tax)
Capital Gains Tax
Inheritance Tax
Petroleum Revenue Tax
Stamp Duty Land Tax
Annual Tax on Enveloped Dwellings

The GAAR applies to National Insurance contributions from March 2014.

[convict]

GAAR is not retrospective for schemes prior to its introduction in July 13

[webberg]

Can these penalties (60% of tax owed) be applied to contested EBT figures from the 2010-2011 tax year that are in an appealed state at the present time?

If so I may see if HMRC wish to settle using the funds I put in my CTD even though it is outside the settlement window...

NO.

[derekdunn1873]

GAAR Penalties...

Can these penalties (60% of tax owed) be applied to contested EBT figures from the 2010-2011 tax year that are in an appealed state at the present time?

If so I may see if HMRC wish to settle using the funds I put in my CTD even though it is outside the settlement window...

Autumn Statement: GAAR gets more teeth
Autumn Statement: GAAR gets more teeth | AccountingWEB

Extracts:

George Osborne has given the General Anti-Abuse Rule (GAAR) more teeth with new penalties in the Autumn Statement 2015.

In his statement Osborne revealed the introduction of a new penalty of 60% of the tax due to be charged in all cases successfully tackled by the GAAR. The government will also make small changes to the GAAR’s procedure to improve its ability to tackle marketed avoidance schemes.

Also revealed in the Autumn Statement, new rules will be introduced to stop avoidance of stamp tax where ‘deep in the money’ options are used to transfer shares to a depositary receipt issuer or clearance service.

To help reduce opportunities for income to be converted to capital to gain a tax advantage, the government will also shortly publish a consultation on the company distributions rules.

It will also amend the transactions in securities rules and introduce a ‘Targeted Anti-Avoidance Rule’, according to Treasury papers.

The Autumn Statement documentation also stated: “The government is aware of tax planning around the intangible fixed assets regime used to obtain more generous corporation tax relief than is intended by the legislation. It will therefore amend the regime to stop arrangements that use partnerships to obtain relief that was not intended.

“The government will also amend legislation to counter two types of avoidance involving capital allowances and leasing, which involve businesses artificially increasing the value of their capital allowances or lowering the amount of tax which they pay,” the statement reads.

Lucy Brennan, partner at Saffery Champness also commented on the anti-avoidance measures: “Although efficiency measures such as a combined centre and digitalisation will assist with this one has to ask, with the GAAR in place, where further avoidance will come from, given we are still waiting for the first GAAR cases to be heard.”

On capital allowances and leasing, the measure is in two parts: Preventing a person using an artificially low disposal value for capital allowances purposes on the disposal of plant or machinery where tax advantage is one of the main purposes of the arrangements which include that disposal; and it brings into tax as income, if not already so taxed, any consideration receivable by a person, or a connected person, for agreeing to take over payments under a lease for which that person can claim tax deductions.

[eazy]

From AccountingWeb :

Philip Fisher of BDO said the “tinkering around avoidance” was “unlikely to re-float the economy, since to date it is not clear that a single tax (not) payer has been caught in the GAAR net.”

Tina Riches of Smith & Williamson added that taxpayers were still very much in the dark on what is caught by the GAAR. “To date HMRC has not reported on any cases going to the GAAR panel formed after the 2013 legislation, so it seems rather premature to bring in GAAR penalties,” she said.

[webberg]

The GAAR stuff is the inevitable mission creep that HMRC denied would happen.

[eazy]

AccountingWeb : GAAR gets more teeth

Autumn Statement: GAAR gets more teeth
Autumn Statement: GAAR gets more teeth | AccountingWEB

Extracts:

George Osborne has given the General Anti-Abuse Rule (GAAR) more teeth with new penalties in the Autumn Statement 2015.

In his statement Osborne revealed the introduction of a new penalty of 60% of the tax due to be charged in all cases successfully tackled by the GAAR. The government will also make small changes to the GAAR’s procedure to improve its ability to tackle marketed avoidance schemes.

Also revealed in the Autumn Statement, new rules will be introduced to stop avoidance of stamp tax where ‘deep in the money’ options are used to transfer shares to a depositary receipt issuer or clearance service.

To help reduce opportunities for income to be converted to capital to gain a tax advantage, the government will also shortly publish a consultation on the company distributions rules.

It will also amend the transactions in securities rules and introduce a ‘Targeted Anti-Avoidance Rule’, according to Treasury papers.

The Autumn Statement documentation also stated: “The government is aware of tax planning around the intangible fixed assets regime used to obtain more generous corporation tax relief than is intended by the legislation. It will therefore amend the regime to stop arrangements that use partnerships to obtain relief that was not intended.

“The government will also amend legislation to counter two types of avoidance involving capital allowances and leasing, which involve businesses artificially increasing the value of their capital allowances or lowering the amount of tax which they pay,” the statement reads.

Lucy Brennan, partner at Saffery Champness also commented on the anti-avoidance measures: “Although efficiency measures such as a combined centre and digitalisation will assist with this one has to ask, with the GAAR in place, where further avoidance will come from, given we are still waiting for the first GAAR cases to be heard.”

On capital allowances and leasing, the measure is in two parts: Preventing a person using an artificially low disposal value for capital allowances purposes on the disposal of plant or machinery where tax advantage is one of the main purposes of the arrangements which include that disposal; and it brings into tax as income, if not already so taxed, any consideration receivable by a person, or a connected person, for agreeing to take over payments under a lease for which that person can claim tax deductions.

[philinlondon]

[DonkeyRhubarb]

The only thing that surprises me is that HMG haven't used retrospective legislation more often since they established the precedent with us in 2008.

At least people now are getting a warning, which is more than we ever did.

I'm afraid the rule of law ain't what it used to be. Certainty, natural justice, forget it.

[DotasScandal]

A stupid example might be I choose to drive at 40 in a 30, knowing full well the penalty is 3 points and a means related fine. If they choose next week to make the penalty execution that may well affect my action from then. Applying that back to today is contrary to all forms of natural justice.

A 5 year old would get it, but go try and explain that to Osborne. It's obviously beyond his comprehension.

Of course retrospection will only be used in extreme case. But who defines extreme and when.
Anything they subsequently decide is abusive is at risk. What is to stop that being pension contributions. Dividends (large) in a small company for example. As the tide pulls back the threshold of where abusive is will naturally drop.

Very simple: the end justifies the means, and the needs of the moment define the ends!
Stalin would have been proud.

[ASB]

A principle of natural justice is certainty of action. This drives another coach and horses through that. Certainty is given by applying the law (however unclear) as it stands at the time of the action.

A stupid example might be I choose to drive at 40 in a 30, knowing full well the penalty is 3 points and a means related fine. If they choose next week to make the penalty execution that may well affect my action from then. Applying that back to today is contrary to all forms of natural justice.

Of course retrospection will only be used in extreme case. But who defines extreme and when.

Anything they subsequently decide is abusive is at risk. What is to stop that being pension contributions. Dividends (large) in a small company for example. As the tide pulls back the threshold of where abusive is will naturally drop.

[DotasScandal]

And...there goes the principle of certainty in law! UK going full retard
Once the Retro genie was out of the bottle, there was no way it was coming back in.

[webberg]

Unacceptable

Section 3.87 of the Treasury Blue Book above is a shocking denial of HMRC's culpability in creating a situation and a not so veiled threat about the future.

The proposal of action against those who have used or continue to use arrangements, without specifying what action (and in effect just being a direct threat) is contrary to the rule of law.

Arguably, saying that they reserve the right to legislation in the future but backdated to today, is unconstitutional. How can you arrange your affairs if you don't know what the rules are? What happens to investment and plans for future businesses if you cannot know the law?

Unfortunately the latter position was introduced some years ago by a Labour Treasury minister and no politician since has been sufficiently challenged to reverse it.

to be continued...

[webberg]

Without scaremongering, I would hope this doesn't mean all those APNs that have been withdrawn due to "no valid inquiry" are reinstated following a change of law (to allow APN without inquiry) backdated to today with the new APNs dated tomorrow...

Very unlikely

[squirrel]

"It's worse than that, he's dead Jim"

This implies action against past schemes as well as future ones.

And yes you are right that in 5 years time HMRC could point to this day and say "we warned you".

Without scaremongering, I would hope this doesn't mean all those APNs that have been withdrawn due to "no valid inquiry" are reinstated following a change of law (to allow APN without inquiry) backdated to today with the new APNs dated tomorrow...