The Court of Appeal in its recent judgement in the Schofield case has dealt another blow the tax avoidance industry. The decision was trumpeted yesterday as a victory for the general body of taxpayers by David Gauke, the Exchequer Secretary to the Treasury.
Over the past weekend, we also saw Michael Izza, CEO of the
Institute of Chartered Accountants criticising some of the members
of his profession for pedalling tax avoidance schemes.
So what's the point of a GAAR now? Its two most important functions must surely be to change the outcome of cases which HMRC would otherwise have lost and to deter those who would seek to undermine the tax system by marketing such schemes. On the first count, it is difficult to recall a recent case in which a marketed scheme has found favour in the courts; perhaps the one exception being the Mayes case on which the Aaronson report placed such reliance. On the second, the public mood is now such that taxpayers have to consider the reputational risk before entering into such schemes and clearly advisers have to take account of the views of their regulatory bodies when advising on them.
There are other arguments of course, but the need for a GAAR is perhaps not as pressing as some might argue and appropriate time should be given to getting the current proposals right.
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