As part of the June Budget proposals on tax policy making, the Government announced a consultation to consider introducing a General Anti Avoidance Rule (GAAR). This informal engagement is to be part of a wider consultation on the tax policy making process.

At the time of the June Budget, HM Treasury published “Tax policy making: a new approach”, comments on which are due by 22 September. To enable the Government to adopt “a more strategic approach to tax avoidance to prevent increasing complexity and reduce the need for frequent legislative change” there are a number of proposals including:

• “to consider. . . . whether a General Anti-Avoidance Rule (GAAR) should form one element of strengthened defences.”

This is not the first time a UK government has considered a GAAR. In October 1998, a consultation document issued on this very matter.

While Ireland has had a GAAR for many years, the evidence suggests that the GAAR doesn't eliminate the need to introduce specific anti-avoidance measures. Ireland has just introduced its version of DOTAS; a so-called “Mandatory Disclosure” regime.

GAAR's rely on the Revenue Authority's active pursuit, on a case by case basis, of the mechanisms which officialdom is uneasy with. The principle of form over substance is well established in case law in the UK. Perhaps a legislative encapsulation of the principle will do little to further the interests of either the Revenue Authority or the taxpayer.