The GAAR will result in considerable uncertainty among ordinary non financial companies as to what falls within it. At this point in the economic cycle it would be a mistake to introduce something that chills growth and investments from not only indigenous but also foreign firms. It would be very easy to damage the reputation of the UK as an attractive place to do business through introducing tax uncertainty around normal commercial business planning decisions. Merely taking advice to ensure that a new transaction or project does not increase a company's tax liabilities unnecessarily would probably be caught by the first filter of "tax arrangements" and "tax advantage" which is very widely drafted. The only true filter is the second "abusive" test and this is very subjective, especially without any guidance notes published to date. The ACT calls for the availability of adequate guidance, the establishment of an advance tax clearances process, and real independence of the "panels" proposed to be set up. Colin Tyler, ACT Chief Executive said
The UK needs a stable and certain tax environment without surprises to give business, wherever domiciled, the certainty it needs.
NOTES TO EDITORS The full ACT response to the HMRC proposals for a GAAR is available here.