Overview

This bill introduces a General Anti-Tax Avoidance Principle (GAAP) to prevent individuals and companies from using financial arrangements primarily to avoid paying tax. The GAAP clarifies what constitutes tax avoidance and establishes a process for HMRC to counteract tax advantages gained through such arrangements.

Description

The bill defines "tax arrangements" as those where obtaining a tax advantage through avoidance is a main purpose. It details what constitutes "tax avoidance," encompassing scenarios where tax isn't paid by the right person, at the right time, in the right place, or at all. "Tax advantage" is broadly defined, covering situations like significantly reduced taxable income or gains, improper deductions, and tax paid in an inappropriate jurisdiction. The bill empowers HMRC to counteract tax advantages on a just and reasonable basis, potentially making adjustments across various tax periods and affecting connected parties. The bill also provides a process for taxpayers to apply for clearance on transactions, involving a fee and the provision of comprehensive information. HMRC can obtain information from individuals suspected of tax avoidance. Finally, the bill outlines how courts and tribunals should consider various factors when assessing cases under GAAP, including HMRC guidance and Parliamentary materials.

Government Spending

The bill states that any expenditure incurred by a Minister of the Crown or a government department under the Act, and any increase in sums payable under other Acts due to this Act, will be paid out of money provided by Parliament. Specific figures are not provided in the bill text.

Groups Affected

• Companies and individuals: Those who engage in tax avoidance schemes could face adjustments to their tax liabilities.
• HMRC (Her Majesty's Revenue and Customs): HMRC will have increased powers to investigate and counteract tax avoidance.
• Courts and tribunals: These bodies will be involved in resolving disputes arising from the application of GAAP.

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