Last month the Exchequer Secretary to the Treasury announced that the Government has decided not to proceed further with consultation on the above proposed legislation and will not include it in Finance Bill 2012.

On 1 August HMRC published for consultation a technical note and draft legislation outlining a proposed approach to combating tax avoidance arrangements which exploit the provisions of double taxation agreements (DTAs).

The Government announced that the responses received so far have made it clear that the proposed legislation, as drafted, could cause significant uncer-tainty for compliant UK businesses and overseas investors about its intended scope and its practical effect.

It has therefore decided not to proceed further with the consultation on the proposed legislation and will not include it in Finance Bill 2012. However, the Government will continue to challenge specific arrangements that clearly seek to abuse provisions in a DTA.