The GAAR panel has published its latest opinion, again concluding that a scheme using complex arrangements involving an employer, employee and EFRBS to avoid employment income tax charges (on similar facts to the scheme described in our March edition ) was not reasonable since it was not consistent with the principles behind the relevant tax provisions, was designed to exploit a perceived shortcoming in the disguised remuneration rules and was abnormal and contrived.
The conclusion itself is unsurprising. The scheme in question did, however, raise a new question since some of the arrangements in it had been implemented before the GAAR come into effect.
The panel concluded that this did not prevent the GAAR from applying since the relevant payments were made after the GAAR come into effect, the postcommencement transactions were capable of being abusive considered in isolation, the pre-commencement steps were preparatory or could be ignored and even if they were considered material they would not have prevented the post-commencement arrangements from being abusive.
This will be relevant to any arrangements which straddled the introduction of the GAAR and where taxpayers or advisers were relying on the arrangements being treated as outside the scope of the GAAR by reason of their precommencement transactions.