A recent article we published gave an interesting perspective on a piece of legislation which could, in theory, replace IR35.
Its name, GAAR, doesn’t invoke feelings of hope and enthusiasm. So if the tax law does come into being let’s hope it doesn’t makes us scream GAAAAAARGH! in exasperation.
What is GAAR and how does it work?
GAAR is a General Anti-Avoidance Rule which lends a more interpretive element to HMRC’s adjudications on matters of disguised employment.
As the article explains: “Unlike IR35, a GAAR is based on principles rather than prescriptive rules, and such legislation would enable new case law to be developed afresh.”
The reason that GAAR’s have come to the fore is because they were referenced in June’s Emergency Budget as a potential replacement for IR35. There are conflicting opinions on the rights and wrongs of the GAAR…
In one camp you have small businesses decrying them as a real threat giving HMRC far too much leeway to make decisions on the hoof. Another view is that trying to legislate for this grey area of tax law requires a sensible and necessarily flexible approach.
To find out more about General Anti-Avoidance Rules, you can access the enlightening article here.