Feeding into the government’s recently-closed consultation on GAAR, ACCA says that it agrees fully with the aims of the GAAR project - to reduce the scope for abusive and fundamentally unproductive efforts to extract unintended advantages from the tax system.
But ACCA has concerns about the timetable for consultation and the structure of the Advisory Panel to take the project forward.
Chas Roy-Chowdhury, head of tax at ACCA explains: 'Dealing with complexity should lie at the heart of reforming the UK’s tax system. In India, facing the same issues, the Prime Ministerial panel there has advised that the implementation of a GAAR rule should be deferred for three years, and we agree that neither should the UK rush headfirst into change. We want to see a more measured approach to drafting the legislation and establishing the true impact of its provisions on both taxpayers and the tax authority.
'We are concerned about the role of the proposed Advisory Panel, especially given that that the makeup of the Panel is not yet known. We have advised that this important panel is composed of experienced and impartial experts, which can give an opinion based on knowledge of the legislation and its commercial impact.'
Speaking about tax certainty, Mr Roy-Chowdhury adds: 'We support the principle of certainty in the tax system. By removing the incentive to investigate wholly artificial schemes, a targeted anti-abuse rule would encourage redistribution of efforts into productive activities, rather than the sterile process of seeking a pure tax advantage based on controversial or unexpected features of the increasingly complex tax system.'
However, ACCA is concerned that the draft GAAR legislation as it stands runs the risk of increasing the administrative burden on taxpayers, as well as their advisers because they would be forced to consider an extra layer of legislation when looking at alternative tax treatments.
Chas Roy-Chowdhury explains: 'The complexity of the UK tax system already imposes a disproportionate burden on the small and medium sized enterprises (SMEs) which make up the majority of UK businesses. ACCA is strongly opposed to the imposition of any further uncertainty or complexity on them and their advisers. In the absence of specific terms limiting the application of the legislation to businesses exceeding the limits for the generally accepted SME definition, there must be clarity around the application of the rule removing the threat of the GAAR from the vast majority of everyday transactions undertaken by a typical business.'