Chief Executives of public companies seem to be grilled about ‘abusive’ tax avoidance by MPs on a daily basis. Tax avoidance schemes used by celebrities are splashed over the front pages. Now, the Government has introduced a ‘General Anti-Abuse Rule’ (‘GAAR’) to tackle it. Tax avoidance has never been so topical.
On 17th July, the Finance Bill 2013 received Royal Assent, meaning the GAAR is now in force. GAAR’s purpose is to prevent tax advantages resulting from ‘abusive tax arrangements’, and sets out guidance on what this means. While the scope of GAAR will become more clearly defined in time, it is a fundamentally different approach from previous ‘anti-avoidance’ legislation to address this high-profile issue. Courts can now potentially override tax rules if they find an arrangement to be ‘abusive’, so the grey area between what is ‘avoidance’ and what is ‘abusive’ will need extra scrutiny from advisors and clients alike.
The Finance Act 2013 has also introduced significant other changes affecting private individuals, notably the Statutory Residence Test (which provides some clarity to those unsure if they are tax-resident), provisions to deter the holding of high-value residential properties within companies, and conditions and restrictions concerning the treatment of liabilities for inheritance tax purposes for deaths on or after 17th July.
If you would like any further information on how these changes might affect you, please contact the partner at Hunters having responsibility for your legal matters, or send an email stating the nature of your query to the following address: firstname.lastname@example.org