The 2012 Budget The GAAR Proposals And The HNWU
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introduction of the proposed GAAR (general
anti-avoidance rule) in the 2012 Budget has placed focus on HMRC’s
units for the very rich and “almost very rich”.
Net Worth” (HNW) individuals tax affairs are dealt
with by a special HMRC unit dedicated to the personal tax affairs of
wealthiest individuals – the HNWU (High Net Worth Unit). At
first the unit was
cynically to be a way for HMRC to group together all the very wealthy
in order to monitor and tax them harder.
The definition of HNW is considered to be wealth of
have brought in a unit underneath the HNWU.
This is known as the “Affluent Unit” which is
a new enquiry-focused team for wealthy taxpayers who are categorised as
below the HNWU level. The
was set up in September 2012 and will target people who are typically
taxpayers (soon to be 45%). So
tax advisers make sure tax planning doesn’t become what HMRC views as
avoidance or, as it is emotively called, ABUSE (general anti-abuse
Budget proposals for the introduction of a GAAR result
in further uncertainty for those undertaking a legitimate
restructuring. What is the definition of
legitimate? Much of
the GAAR suggestions rely on emotive
and often undefined language such as ‘exploiting’ and ‘avoiding’.
are many who consider that the GAAR l17
cannot be introduced without a clearance procedure before the proposed
is more than reasonable for an adviser to take an
alternative interpretation of legislation to HMRC in a wide variety of
can be useful to have
proactive and pre-filing engagement with the HNWUs or more formally via
non-statutory clearance process.
are the advantages of working with the HNWU?
clarification of the facts and important
dialogue as opposed to the harsh
to HMRC’s technical specialist resource within
a realistic timescale.
certainty in understanding how successful the
claim will be and whether litigation is a likely outcome.
would be those that would argue that the
decision as to whether to voluntarily transfer to the HNWU comes down
personal preference of both adviser and taxpayer and possibly their
talking to the right
people within HMRC can go some way to mitigating risk on both high
complex transactions and structuring but can also highlight problems to
adviser must now try to ensure their clients
understand what being in the HNWU or the Affluent Unit means.
This is important for
those clients who
already belong to the unit and those who could consider migration or
be asked to transfer. Complex
affairs where some members are in the unit and some are not should be
the list for consideration of a transfer to the HNWU.
About the Author
Supplied by Julie
F.C.A. Butler & Co, Bennett House, The Dean, Alresford, Hampshire,
Tel: 01962 735544. Email; firstname.lastname@example.org,
the author of Tax Planning for Farm and Land Diversification (Bloomsbury Professional), Equine
ISBN: 0406966540, and Stanley: Taxation
of Farmers and Landowners (LexisNexis).
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Article Published/Sorted/Amended on Scopulus 2012-07-05 17:36:17 in Tax Articles