United Kingdom


  • Service: Tax
  • Type: Press release
  • Date: 12/06/2012

Proposed General Anti-Abuse Rule on tax brings more not less uncertainty on ‘reasonable tax planning’ vs ‘unacceptable tax avoidance’ says KPMG 

  • Taxpayers entering into any planning at all will have a “sword of Damocles” hanging over their head, says KPMG

Commenting on the consultation document issued by HMRC today on a General Anti-Abuse Rule (GAAR) for tax, Chris Morgan, head of tax policy at KPMG, said:


“It’s a real shame that the general anti-avoidance rule announced today is likely to lead to more, not less, uncertainty over where the line is drawn between ‘reasonable tax planning’ and ‘unacceptable tax avoidance’ which is often a key bone of contention between taxpayers and tax authorities when agreeing what is the ‘right’ amount of tax due.


“This uncertainty is because today’s proposals do not include any system of clearances under which a taxpayer could agree in advance with HMRC whether a proposed tax arrangement was acceptable.  HMRC must refer to an Advisory Panel before invoking the GAAR but does not provide pre-transaction clearance.


“The GAAR aims to target artificial and abusive tax planning and is not designed to be a broad spectrum rule that would sweep up arrangements made in the normal course of business.  The Government is to be applauded for following Graham Aaronson QC’s Report recommending such a targeted approach.  However, looking at the wording of the proposals today, it could go much wider than this as it is based on what is and is not ‘reasonable’ in both the wording and spirit of the legislation.  What is reasonable to one person is unacceptable to another and ultimately the Courts will have to decide where the line is.  Taxpayers who enter into any planning at all will therefore have a sword of Damocles hanging over their head, not knowing if HMRC will invoke the new rule and how a Court will ultimately apply it.


“Especially in times of austerity the need for a GAAR is understandable. Unfortunately though the absence of a clearance system creates uncertainty and makes the UK less attractive as a place to do business which goes against the recent trend of making the tax system more competitive internationally.”



For further information please contact:


Margot Cowhig, KPMG Corporate Communications

Tel:  0207 694 4246 Mobile: 07920 274856: margot.cowhig@kpmg.co.uk


KPMG Press Office: 0207 694 8773


Notes to editors.


About KPMG


KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 11,000 partners and staff.  The UK firm recorded a turnover of £1.7 billion in the year ended September 2011. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 152 countries and have 145,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.  KPMG International provides no client services.