What does GAAR mean in LAW & LEGAL
The General Anti-Abuse Rule (GAAR) is a UK law intended to prevent tax avoidance and other forms of aggressive tax planning. The GAAR was enacted in 2013, with the intention of establishing a legal framework that would allow for expedient enforcement against those misusing the established tax system for their own benefit.
GAAR meaning in Law & Legal in Governmental
GAAR mostly used in an acronym Law & Legal in Category Governmental that means General Anti-Abuse Rule (UK)
Shorthand: GAAR,
Full Form: General Anti-Abuse Rule (UK)
For more information of "General Anti-Abuse Rule (UK)", see the section below.
Essential Questions and Answers on General Anti-Abuse Rule (UK) in "GOVERNMENTAL»LAW"
What is meant by tax avoidance?
Tax avoidance is an often-used but misunderstood term that refers to the reduction of taxes owed within the limits of the law. It includes practices such as making strategic investments to lower taxes owed, or taking advantage of available deductions and credits.
How does the GAAR differ from other anti-tax avoidance rules?
Unlike other laws that specifically target certain groups or activities, the GAAR applies more broadly, making it easier for HM Revenue & Customs (HMRC) to detect and challenge those engaging in certain types of aggressive tax planning. The GAAR also creates a higher burden of proof for those accused of tax avoidance, making it more difficult for them to successfully challenge any allegations.
What type of behavior does the GAAR seek to prevent?
The primary focus of the GAAR is on preventing tax avoidance through artificial structures that lack economic substance and are not intended for genuine commercial purposes. This includes anything from exploiting loopholes in existing legislation or creating schemes which generate substantial losses in order to reduce taxable income and profits.
Are there any exceptions under the GAAR?
Yes, there are specific exceptions which are detailed in legislation including transactions involving offshore matters and corporate reorganisations carried out on arm's length terms between connected companies by way of company reorganisations. However, these exceptions do not generally apply when a taxpayer has sought to set up an arrangement with artificial features specifically created with a view towards minimising taxable profits or artificially shifting profits away from UK taxation.
Is it possible to challenge a decision made by HMRC under the GAAR?
Yes, it's possible to contest decisions made by HMRC regarding potential breaches of the GAAR through an appeal process known as “Extra Statutory Concession E2†(ESC E2). Those wishing to make an appeal must first obtain permission from HMRC before proceeding in order for their case to be heard by an independent tribunal.
Final Words:
The General Anti-Abuse Rule was created as part of a larger effort by HM Revenue & Customs (HMRC) to combat aggressive tax planning practices within UK legislation. The prevailing interpretation behind this regulation holds that all artificial arrangements amounting to abusive acts should be considered void and overturned in favor of fair taxation rules geared towards benefitting taxpayers who abide by regulations already established within UK law.
GAAR also stands for: |
|
| All stands for GAAR |