Skip to content

ACCA Strategic Professional · Advanced Taxation (UK) · Ethical and professional issues arising from the giving of tax planning advice

Under the UK General Anti-Abuse Rule (GAAR), which of the following is correct?

The GAAR counteracts tax advantages arising from abusive arrangements. It uses a double reasonableness test, asking whether the arrangements could reasonably be regarded as a reasonable course of action. It covers several taxes and is not limited to fraud or to income tax.

  1. AThe GAAR applies only to arrangements that are fraudulent
  2. BThe GAAR counteracts tax advantages from abusive arrangements, judged by whether they are a reasonable course of action, and the double reasonableness test appliesCorrect
  3. CThe GAAR applies only to income tax and does not cover corporation tax or inheritance tax
  4. DAny arrangement that reduces tax is automatically abusive if HMRC disagrees with it

Explanation

The GAAR targets abusive arrangements, tested by whether entering into or carrying out the arrangements cannot reasonably be regarded as a reasonable course of action, the double reasonableness test. It covers many taxes including income tax, corporation tax and inheritance tax. It is not limited to fraud, and HMRC disagreement alone is not enough.

Did you get it right without looking?

One question tells you little. A timed set on Ethical and professional issues arising from the giving of tax planning advice shows your real accuracy, how long you take and where you lose marks.

Practise Ethical and professional issues arising from the giving of tax planning adviceFree diagnostic mock

More Ethical and professional issues arising from the giving of tax planning advice questions