GAAR is a broad-based anti-avoidance rule that allows HM Revenue and Customs (HMRC) to counteract tax arrangements deemed to be abusive. GAAR applies to all taxes administered by HMRC and is intended to tackle the most egregious forms of tax avoidance. This rule applies to any arrangements that are abusive or contrived, and that result in a tax advantage that Parliament did not intend. Effective July 17, 2013, the United Kingdom implemented general anti-abuse rule (GAAR). The most important taxes, such as income tax, capital gains tax, inheritance tax, corporation tax, petroleum revenue tax, SDLT, ATED, diverted profits tax, and national insurance payments, are within its purview. The goal of the GAAR is to crack down on tax avoidance schemes. The rule will only apply, according to HMRC’s interpretation of the rule’s advice, if the taxpayer’s proposed course of action seeks to achieve a favoured tax outcome that Parliament did not expect when it introduced the relevant tax rules and, more importantly, if the taxpayer’s proposed course of action cannot be considered as reasonable. The Act has several checks and balances meant to give the taxpayer the benefit of the doubt in any ambiguous situations. In addition to the GAAR, tax legislation has various anti-avoidance rules. Some of these measures may take the form of targeted anti-avoidance rules (TAARs), while others may be less forceful. The GAAR basically stands above these rules and can be used to go after an abusive action that uses a TAAR or other anti-avoidance rule as a means to a course.

These rules apply to transactions between related parties and aim to ensure that profits are not artificially shifted between different entities to reduce the overall tax liability.

These rules aim to prevent UK companies from diverting profits to low-tax jurisdictions by taxing the profits of certain foreign subsidiaries of UK companies.

DPT applies to multinational companies that use complex structures to divert profits from the UK. DPT imposes a higher tax rate on diverted profits to discourage such arrangements.

DOTAS requires taxpayers and advisers to disclose details of certain tax avoidance schemes to HMRC. The aim is to increase transparency and allow HMRC to investigate and challenge such schemes.