Almost of equal interest are those measures which impact on the way we do our work – the administration of the tax system and proposed anti avoidance and anti evasion measures.
Specific areas of avoidance are mentioned for attention – the use of trust mechanisms for example in employee remuneration. New measures are promised which will take effect from 6 April.
There is also a proposal for a General Anti Avoidance Rule, or rather, a proposal about proposals – “As part of the approach to develop sustainable responses to avoidance risk, the Government intends to examine whether the option of a General Anti-Avoidance Rule (GAAR) should form one element of strengthened defences. This informal engagement will be part of a wider consultation on the tax policy making process.”
The thing about GAARs is that, over time, they don’t eliminate the need to introduce specific anti avoidance measures. This is because they rely on the Revenue Authority’s active pursuit, on a case by case basis, to trap the mechanisms which officialdom is uneasy with. Arguably too, when the principle of form over substance is so well established in case law, a legislative encapsulation of the principle does nothing to further the interests of either the Revenue Authority or the taxpayer.
DOTAS (Disclosure of Tax Avoidance Schemes) “Substantive changes to the descriptions of schemes required to be disclosed (hallmarks) will be worked up for 2011-12 in tandem with the wider development of tax policy in the areas affected.” This announcement sits uneasily with GAAR proposals. If either system works well, it makes the other unnecessary.
The paper to read, and from which the quotes in this article are taken, is here