The General Anti-Abuse Rule (GAAR) was first introduced to the UK in the summer of 2013, following an increased awareness of tax abuse and concerted social media campaigns targeting specific companies. Faced with this increasingly frenetic media storm, politicians were forced to address the public’s concerns and to lead consultations for the arrival of the GAAR.
However, over two years later, and despite the climatic anticipation to what was badged as a fix-all tax abuse solution, little has been heard of the GAAR since.
To try and find out what, if anything, is happening with the GAAR, Burges Salmon submitted a Freedom of Information Act request.
The answer to that request has been a long-time coming, but HMRC has now confirmed to us – as we rather assumed - that no cases had yet led to a formal counteraction notices and consequently no cases have made their way to the GAAR panel. So much was predictable.
Other aspects of HMRC's response do give some hints about how HMRC are viewing the GAAR, though.
First, HMRC say they do not keep central data about the number of cases in which the GAAR is being considered. Given that the GAAR can only be invoked by a designated officer (i.e. centrally rather than in local districts), this suggests that HMRC is not actively pursuing GAAR cases at the moment.
Second, HMRC indicate that they specifically see the main purposes of the GAAR as a deterrent to those who seek to participate in the most abusive tax avoidance. Therefore, by using this as their yardstick of measurement, HMRC are seemingly content that the GAAR is having the desired deterrent effect and that this is the reason why, as yet, no GAAR cases have been issued, and certainly none to the GAAR panel.
Of course, as Jeremy Corbyn has demonstrated, in order for a deterrent to be credible, you have to indicate a willingness (in extremis) to use it.
Outside our FOI request, we have heard rumours that the first actual GAAR case may be imminent – but we have been wrong about that before – and if deterrence is the true object then perhaps HMRC will be content simply to let such rumours circulate. For now, we can only continue to watch this space.