UK Tax Anti-Avoidance: GAAR, ToAA and Close Companies

A comprehensive overview of the United Kingdom's anti-avoidance tax legislation, focusing on deterring and counteracting abusive tax arrangements. Key statutes explained include the General Anti-Abuse Rule (GAAR), which targets schemes lacking commercial purpose under a "double-reasonableness" test, and the Transfer of Assets Abroad (ToAA) provisions, which tax UK residents who transfer assets offshore to avoid tax on income. We also talk about upcoming government policy intended to tighten Capital Gains Tax anti-avoidance rules concerning share exchanges and reorganisations. We discuss abou tthe high evidential burden on taxpayers attempting to rely on the "motive defence" under ToAA, citing the A Moran v HMRC case as a practical example. Finally, we stress the severe financial consequences of using these schemes, including significant penalties (e.g., 60% under GAAR) and the application of Accelerated Payment Notices (APNs).