BKM506500 | Governance protocol: what is a potential GAAR transaction?

The Protocol states that escalation to HMRC directors is required where a transaction is a potential General Anti –Abuse Rule (GAAR) transaction.

A potential GAAR transaction will include any case where any of the following notices envisaged by the GAAR legislation has been issued and counteraction under the GAAR is still being considered. These notices are:

• a notice of proposed counteraction under FA13/SCH43/PARA3,

• a provisional counteraction notice under FA13/S209A,

• a pooling notice under FA13/SCH43A/PARA1, or

• a notice of binding under FA13/SCH43A/PARA2.

Where a notice has been issued but a point has been reached where no further steps will be taken under the GAAR to counter a tax advantage, this will no longer be considered to be a potential GAAR transaction.

A potential GAAR transaction will not include cases where SCS in LB and BAI are considering escalation under the Code, but the point has not yet been reached where a decision has been made about issuing notices under the GAAR. This will include pre-transaction or pre-filing situations, in many of which insufficient information will be available to make a decision about the GAAR.