Complex anti-avoidance rules are now an embedded feature of our tax system and the Government’s appetite to create new ones appears to be undiminished (the content of the 2016 Finance Act is a pretty good barometer in this respect).
Whilst we haven’t attempted to count them ourselves, reliable sources suggest that there are nearly 300 targeted anti-avoidance rules (TAARs) on the statute books already. If this arsenal of TAARs proves to be inadequate, HMRC can call upon the tax equivalent of the ultimate weapon – the General Anti-Abuse Rule (GAAR or GAAAARGH if you prefer).
The problem with TAARs is that they tend to be so widely drawn that they inevitably catch many ordinary commercial transactions. Many of these TAARs feature a motive test (in other words, was Tax Avoidance a main purpose of one of the main purposes of the proposed arrangements?).
As a result, professional advisers have become increasingly reliant on HMRC’s published guidance to determine the tax consequences of a transaction, which is a deeply unsatisfactory state of affairs for both taxpayers and their advisers.
The good news (if we can put it like that) is that the tax risks can be managed in many cases and we are happy to act as a sounding board on the scope and application of specific anti-avoidance rules. For example, the issues raised by the Transactions in Securities rules crop up time and again in the context of ordinary commercial transactions and we can bring our experience of their operation to enable you to advise your clients with greater confidence.