Law Society calls for clarity on proposed anti-tax avoidance rules
Without adequate guidance, proposed anti-avoidance rules risk being too broad and will lack certainty, the Law Society of Scotland said ahead of the Scottish Parliament stage 1 debate tomorrow, Tuesday, 20 May.
The Society has commended the Scottish Government for taking steps to combat tax avoidance within the Revenue Scotland and Tax Powers Bill, but believes the proposed measures will require extensive guidance to ensure clarity for taxpayers and prevent Scotland facing commercial disadvantage.
The Society also believes that an independent advisory panel should be created to provide expertise on what contravenes the proposed tax avoidance rules rather than Revenue Scotland, as the new tax authority created under the Bill, sitting as 'judge and jury' on its own decisions.
Isobel d'Inverno, Convener of the Law Society's Tax Law Committee, said: "We support the Bill's intentions and are pleased to see the Scottish Government take steps to combat tax avoidance.
"However we have raised concerns about such a broad definition of a General Anti Avoidance Rule (GAAR), which we think could lead to taxpayer uncertainty on how the rule would be applied. Ensuring taxpayer certainty will be essential, particularly to make sure that Scotland doesn't suffer any commercial disadvantage.
"We are pleased therefore that the Scottish Parliament's Finance Committee has recommended that Revenue Scotland must consult widely on draft guidance on the application of the GAAR both before publication and on any substantive revisions that are made."
Note to Editors
The Revenue Scotland and Tax Powers Bill is the third of three related Bills being brought forward by the Scottish Government as a consequence of measures enacted in the Scotland Act 2012.
The Bill will provide for the establishment of Revenue Scotland as the tax authority responsible for collecting the two new devolved taxes (Land and Buildings Transaction Tax and Scottish Landfill Tax) and any other taxes which may be devolved or introduced in future.
The Bill also provides for the powers and duties of Revenue Scotland, including duties to provide information and guidance to taxpayers, and the rights and duties of taxpayers, including opportunities to resolve tax disputes quickly and efficiently. The Bill also proposes a Scottish General Anti-Avoidance Rule (GAAR) which will allow Revenue Scotland to counteract tax avoidance arrangements which are artificial. The proposed Scottish GAAR will thus be wider than the UK GAAR, which targets abusive arrangements.
The Society's written evidence and a link to oral evidence given to the Finance Committee can be found on the Society's website.
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