THE UK is the latest country to draft a new anti-avoidance rule. While making the Draft General Anti-Abuse Rule (GAAR), the Exchequer Secretary David Gauke has reiterated the Govt's commitment to tackle tax avoidance. ''Through collaborative consultation and well-designed legislation, our aim is to prevent avoidance at the outset, reducing the need for counteraction,'' he added.

The HMRC had set up an indepenent panel to do a study on this issue. And as per its report, a general anti-abuse rule would deter artificial tax avoidance schemes that can only be regarded as wholly unacceptable. Furthermore, it would contribute to providing a more level playing field for business, Mr Gauke adds.

He further pointed out that a GAAR will strengthen the Government’s anti-avoidance strategy and complement the existing tools HMRC has at its disposal to tackle avoidance. It will act as a deterrent to those engaging in artificial and abusive avoidance schemes and where such schemes persist the GAAR will improve HMRC’s ability to tackle them effectively.