General Anti-Abuse Rule Penalties

A GAAR penalty applies where a taxpayer submits a tax return on the basis that a tax advantage is obtained from tax arrangements that are subsequently counteracted under the GAAR by counteracting adjustments. The penalty is 60% of the counteracted adjustments.

The GAAR penalty makes the use of tax arrangements that might be at risk of counteracting adjustments potentially dangerous in terms of a possible costly penalty. Indeed, when a taxpayer receives a proposed counteraction notice from HMRC he will be under heavy pressure to take corrective action to prevent the matter from being referred to the GAAR Advisory Panel in order to avoid the risk of a penalty. This is because the taxpayer has 30 days to take the corrective action before the “closed period” starts and he will not be able to take corrective action to avoid the penalty until the final counteraction notice is confirmed.

In other words, a taxpayer who declines to take action in the face of a provisional counteraction notice and allows the matter proceed to the GAAR Advisory Panel is locked into the possibility of a 60% penalty if he eventually loses. The fact that such a penalty which is classed as “criminal” for the purposes of the Human Rights Act, is threatened prior to referral of the taxpayer’s case to the panel may breach the taxpayer’s rights under the Act and so it may be unenforceable.

If you have any questions or need advice about GAAR penalties contact Patrick Cannon now.

Frequently Asked Questions

Other Practice Areas

Direct Access Tax Barrister

Instruct Patrick Cannon directly, without having to go through a solicitor

Read More

Mediation services

A faster and more cost-effective solution, offering certainty of outcome.

Read More

Income Tax Fraud

Representation in income tax fraud investigations.

Read More

Money Laundering

Advice in Money Laundering Accusations and Cases

Read More

Offshore Disclosure Facility

Offshore Disclosure Facility and Voluntary Disclosures

Read More

Tax Avoidance Schemes

The mis-selling of aggressive tax avoidance schemes.

Read More

GAAR & Enabler Penalties

GAAR Penalties and Enabler Penalties.

Read More

Civil and Criminal Tax Investigations & Disputes

HMRC civil and criminal tax investigations and disputes.

Read More

Stamp Duty Land Tax

Tax advice and representation in Stamp Duty Land Tax.

Read More

Make An Instruction

If you wish to instruct me please provide your details below and we will get back to you with the necessary documents.

Office Address

Old Square Tax Chambers
15 Old Square
Lincoln's Inn