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The Association of Chartered Certified Accountants has attacked UK government plans to introduce a General Anti-Abuse Rule against tax avoidance, claiming that it is unnecessary and that it will result in uncertainty while failing to prevent tax abuse.
ACCA's Head of Tax, Chas Roy-Chowdhury, argued that: "We don't need GAAR as there is already considerable legislation in place to capture genuine tax abuse. If the Government feels businesses are not paying enough tax, anti-abuse measures are not the way to go about rectifying that. A fundamental review of the tax system is needed."
He added that: "While larger businesses will be able to ensure compliance to GAAR with ease, it will create uncertainty for the many small businesses and individuals who will have sleepless nights wondering whether the perfectly legitimate financial planning they have used is considered abusive under the rules, when the aim of that planning is to create reinvestment, jobs and export opportunities for their enterprise."
Roy-Chowdhury believes that the GAAR may deter investment into the UK, and he noted that countries such as India have put plans for a GAAR on hold while such concerns are addressed. ACCA believes that many instances of what has been labelled as "tax avoidance" are in fact within the perimeters of tax law and that the introduction of GAAR would not capture those instances. Roy-Chowdhury also raised the possibility of "mission creep," in which the GAAR would come to affect "even those who self-assess."
If the measure does go ahead, Roy-Chowdhury argues that it should be "phased in on a tax-by-tax basis to reduce confusion and uncertainty and to identify any problems the new rules have."
ACCA and Roy-Chowdhury recently gave oral evidence to the House of Lords Economic Affairs Committee.
ACCA was founded in 1904, and it is the global body for professional accountants. It has 154,000 members and 432,000 students in 170 countries, and it works through a network of over 80 offices and centres and more than 8,400 Approved Employers worldwide.
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