Scottish general anti-avoidance rule (Scottish GAAR)

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Owner-Managed Businesses

Guidance

Background

The Scottish GAAR is contained within RSTPA 2014, ss 62–72. The stated purpose of the rule is to protect revenue through counteracting tax avoidance arrangements, and is intended to work in tandem with the targeted anti-avoidance rules contained within the legislation implementing the devolved taxes.

The Scottish GAAR is effective from 1 April 2015 and applies to devolved taxes. A devolved tax is a tax specified as such by Scotland Act 1998, Part 4A. The devolved taxes are presently land and buildings transaction tax (LBTT) and Scottish landfill tax (SLFT). The number of devolved taxes will increase once the recommendations of the Smith Commission are implemented. Air departure tax and the aggregates levy are expected to be devolved at some point in the future. The Scottish rate of income tax is not a devolved tax and remains under the control of HMRC, therefore is not within the Scottish GAAR.

The legislation governing the operation of the Scottish GAAR is at first glance self-explanatory and straight-forward,

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Andrew Ford

Director at Barr & Ford Limited

Andrew set up Barr & Ford Limited as an independent tax consultancy in May 2014 after a career in tax encompassing both Big Four and mid-tier accountancy practices, and a period as Head of Tax at an Edinburgh law firm. Andrew is presently vice chairman of the Glasgow Branch of the Chartered Institute of Taxation, and has specialised in taxation for individuals, trusts and owner managed businesses for over 20 years.

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