As part of the Government's ongoing targeting of avoidance, there have been a number of recent developments in this area worthy of note.

Last month the Exchequer Secretary, David Gauke MP, announced in a written ministerial statement (WMS) that a study is to be set up headed by Graham Aaronson QC to consider the possibility of introducing a General Anti Avoidance Rule (GAAR). The study will report back to Ministers in October 2011.

The terms of reference require the study to consider whether a GAAR can meet the following objectives:

• Provide Government with an effective means of deterring and countering tax avoidance
• Ensure that the rules work fairly and will not erode the UK tax regime's attractiveness to business
• Ensure that certainty about the tax treatment of transactions can be provided without undue compliance costs for businesses and individuals
• Keep any increase in resource costs for HMRC to an acceptable level and ensure that there will be a minimal need for resource to be diverted from other priorities

Full details of the WMS are available at http://www.hm-treasury.gov.uk/d/wms_antiavoidance_061210.pdf

The accompanying press release to this announcement also included details of 5 new tax avoidance measures, two of which took immediate effect. It is projected that an additional £2bn of revenue will be raised over the course of this parliament as result.

The two measures with immediate effect will tackle tax avoidance by:

• Preventing groups of companies using intra-group loans or derivatives, to reduce the group's tax bill
• Addressing schemes where a company does not fully recognise certain amounts in its accounts involving loans and derivatives

Three further measures will tackle tax avoidance through:

• Addressing the practice of disguised remuneration
• Stopping investment companies retrospectively changing the currency they prepare their accounts in for tax purposes
• Tackling businesses who artificially split the supply of services to reduce VAT

A package of five measures revising and extending disclosure had previously been consulted upon with primary legislation included in Finance Act 2010. The package was implemented on 1 January 2011. However, some of the hallmarks (descriptions of schemes requiring disclosure) consulted upon will be implemented at a later date in 2011–12.

Briefly these measures are:

• A new ‘trigger point’ for the disclosure of actively marketed schemes – the point at which a promoter first communicates information (including information about the expected tax advantage) about a substantially designed scheme to a third party with a view to obtaining clients for that scheme
• An information power which gives HMRC the power to require a scheme ‘introducer’ (an intermediary whose function is to introduce clients to the promoter) to identify the promoter
• Increased penalties for failure to comply with a disclosure obligation;
• A new requirement for promoters to provide HMRC with periodic information about clients who implement a notifiable scheme; and
• Revised and extended hallmarks (the descriptions of schemes to be disclosed)

The amended guidance and more information can be found at http://www.hmrc.gov.uk/avoidance/dotas-update-nov10.htm