The government has announced that they will once again look at whether a general anti-avoidance rule should be introduced as a measure to deter limited company tax evaders.
However, the CIoT has questioned whether this would in fact add any benefit to the UK tax system. The last time this idea was considered, in 1999, there were concerns, and some of these still exist today.
The tax policy director of the CIoT, John Whiting, said that for a GAAR to be successful some of the existing tax avoidance regulations would need to be abolished in order to provide a measure of certainty.
He pointed out that we now have a disclosure regime, anti-avoidance rules have been targeted and the courts impose stricter penalties for tax avoidance. Given this success it is questionable whether a GAAR is necessary, he added.
Earlier this week, the government said they were committed to tackling tax avoidance. A spokesman from the Treasury said that they want to reduce the need for regular changes to tax laws and stop increasing complexity. Plans to scrap or overhaul CIoT has recently been campaigning for reforms to the tax laws and they welcome the coalition’s proposals to improve the tax policy making process.
Vincent Oratore, the president of the organisation, said that the process is deeply flawed. Policies are not expertly scrutinised and, due to a lack of parliamentary time, not enough consideration is given to the long-term effects of any changes. The result is badly constructed tax laws that allow some people to avoid tax and others facing unintended losses.
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