Scottish general anti-avoidance rule (Scottish GAAR)

Produced by a Tolley Owner-Managed Businesses expert

Owner-Managed Businesses

Guidance

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 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), Scottish landfill tax (SLFT), tax on the carriage of passengers by air, tax on the commercial exploitation of aggregate, tax on wild fisheries and tax in connection with building control approval. 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, but the apparent lack of complexity means that the rules have broad application. Commentary on the practical implications of the rules are set out below.

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