CBI: GAAR gives too much power to taxman

THE PROPOSED general anti-abuse rule designed to curb tax avoidance will give HM Revenue & Customs too much power, according to the Confederation of British Industry.

The rule is intended to stop “artificial” and “egregious” tax planning schemes, while allowing for tax reductions where there is an obvious commercial purpose.

But the CBI said that, while it supports plans to tackle tax avoidance, the rule has been constructed in such a way as to undermine government efforts to make the UK’s tax system the most competitive of the 20 leading economies, reports the Financial Times.

CBI director-general John Cridland (pictured) expressed concerns that the latest proposal is “just too broad”, and that it “could affect not just abusive transactions but also straightforward tax management”.

He added his voice to the criticism over the accountability of the proposed panel, which would assess whether a scheme falls foul of the rule.

“We are … concerned about the independence of the GAAR panel, which currently has HMRC acting as judge and jury”, he said.

On Friday, John Overs, head of corporate tax at law firm Berwin Leighton Paisner, said: “Well-written laws should function properly without the need to be supplemented by the opinions of an extra-judicial body such as the advisory panel and guidance that is not approved by parliament.”