When is avoiding tax not abusive? A UK perspective

Wednesday, 14 August 2013  Features

How do you stop tax-payers from avoiding their responsibilities to pay tax? And what lessons can be learned from countries other than Australia? Those questions will form part of a talk by Malcolm Gammie QC, one of the most well respected tax thinkers of his generation.

"All avoidance is abusive. However there is a contrast between abusive arrangements and perfectly legitimate tax planning," he said. "The differences between the UK and Australian approach are fascinating."

In his lecture titled Comparative judicial and legislative approaches to tax avoidance in Australia and the UK, he will compare the application of the UK HMRC's (HM Revenue & Customs) new General Anti-Abuse Rule (GAAR), which defines tax arrangements that are abusive in the UK, with the long-standing Australian position on a GAAR.

He said "a GAAR is a second best solution to the issues of avoidance raised by a particular tax. The starting point should be greater clarity in the policy and purpose of the tax provisions that the GAAR is supposed to protect. The UK GAAR covers a variety of taxes and not just income tax. It is, however, deliberately limited in its application, only regarding avoidance as abusive if no reasonable person could regard the taxpayer's arrangements to save tax as reasonable. Before HMRC can invoke the GAAR an independent advisory panel of practitioners must provide a preliminary opinion on the reasonableness of particular arrangements."

"HMRC has published 136 pages of examples of arrangements that it regards as unreasonable but many of the examples are based on cases that HMRC has already won in Court without a GAAR or are examples of straightforward tax planning. They are of limited assistance. In practice HMRC will continue to rely on a plethora of other legislative and non-legislative measures to discourage and counteract avoidance. This contrasts with the Australian approach where the GAAR is more closely integrated with the provisions of the main Act that it is designed to support and has been more widely used."

He adds, "without clarity of policy and purpose tax systems will inevitably continue to struggle to identify, deter and effectively counteract tax avoidance."

Malcolm Gammie QC spent many years as a tax partner at Linklaters. He moved to the Bar in 1997 to concentrate on tax litigation and advisory work and took silk in 2002. He has represented taxpayers at all stages of tax appeals including the House of Lords. Over his career, Malcolm has gained experience in most aspects of taxation and is noted as a leading practitioner in the commercial, European and international taxation fields.

Where: Sydney Hilton
When: 6pm, Thursday 15 August 2013 
For more information contact Malcolm Gammie on 02 9385 9546.

Media contact: Julian Lorkin: 02 9385 1574