On 18 July 2017, the first opinion of the General Anti-Abuse Rule (GAAR) Advisory Panel was issued.

The GAAR was introduced to much fanfare in 2013 in order to deter and counteract "abusive" tax arrangements. A key taxpayer 'safeguard' to offset concerns as to the scope of the GAAR is the requirement for HMRC to refer potential GAAR cases to the independent Advisory Panel. The Advisory Panel is asked to opine as to whether the particular arrangements can be viewed as a reasonable course of action in view of the relevant tax provisions. Only in the event that the Panel opine that the arrangements are not so reasonable, can HMRC continue with a GAAR case.

The particular arrangements involved employee rewards in the form of gold bullion and utilising an employee benefit trust. The arrangements, if effective, would have both avoided a charge under the so-called "disguised remuneration" tax rules and also delivered a tax deduction for the employer company.

The Panel's decision, that the arrangements were not "reasonable", is unsurprising. The taxpayers in this case adopted a contrived set of steps in order to exploit a shortcoming in the relevant legislation that was clearly not intended by Parliament. Nor is it surprising that HMRC are choosing to refer these kinds of arrangements to the GAAR Panel. It seems unlikely that HMRC would want to take the risk of an adverse (in HMRC's eyes) Panel Opinion, at least in these early days of the GAAR at a time when HMRC might want to establish the credibility of the GAAR.

The Panel Opinion can be viewed here.