New anti-abuse recommendations could affect inheritance tax

Proposed changes to the UK tax system could affect those families manoeuvring assets to avoid facing large sums of inheritance tax.

Graham Aaronson submitted plans to the government to institute a general anti-abuse tax rule (GAAR) to deter tax avoidance schemes, contribute to a level playing field for business, and reduce legal uncertainty over legitimate tax avoidance measures.

Mr Aaronson also intends for the GAAR to rebuild trust between taxpayers and Her Majesty's Revenue and Customs (HMRC), and simplify the UK tax system.

David Gauke, exchequer secretary to the Treasury, stated: "[The government] asked Graham Aaronson to consider whether a UK GAAR could deter and counter tax avoidance, while providing certainty, retaining a tax regime that is attractive to businesses, and minimising costs."

While the tax report states that GAAR should initially only apply to direct taxes, if successful it may role into matters of probate.

To prove legitimacy individuals will have to show that decisions made were reasonable in a commercial sense, even if they produce tax benefits.

Published by Phil Hammond