A crack team of tax experts has been formed to investigate whether introducing a General Anti-Avoidance Rule (GAAR) would be an effective way of tackling tax avoidance or instead a legislative nightmare which will leave the UK’s freelancers, contractors and small business owners in a state of bewilderment.

GAARs have previously been forwarded as a possible alternative to IR35 in tackling disguised employment and industry experts seem split on whether it would be a workable solution. Unlike IR35, a GAAR is based on principles rather than prescriptive rules, and such legislation would enable new case law to be developed afresh. We’ve written a handy little guide about GAARs here.

Last December, it was announced that a group would be formed to study the nature of GAAR’s (including how similar set-ups work in countries such as Canada and Australia) and now we can reveal the line-up. Commercial tax lawyer Graham Aaronson will head the operation, and his underlings include:

* Judith Freedman, professor of taxation law at Oxford University’s Centre for Business Taxation.

* Sir Launcelot Henderson, judge of the Chancery Division of the High Court of Justice.

* Lord Hoffmann, judge of the Court of Final Appeal of Hong Kong.

* Howard Nowlan, former tax partner at Slaughter and May and part time judge of the First Tier Tax Tribunal.

* Professor John Tiley, director of the Centre for Tax Law at Cambridge University.

The team will report their findings to Exchequer Secretary David Gauke. Gauke growled his enthusiasm:

“I am setting in train a study programme to establish whether a GAAR could be framed to meet the objectives of deterring and countering tax avoidance in a fair way, while providing certainty, retaining a tax regime that is attractive to business and minimising compliance costs for businesses and HMRC and, if so, how the provisions of the GAAR might be framed.”

The study will be completed by October 31 this year, which suggests there won’t be any changes made to IR35 until at least 2012.

Here at Crunch accounting, our team of accountants are brilliant at tackling IR35 and ensuring our customers don’t fall foul of the legislation.  Find out more about our Expert IR35 Assistance here.