An interesting post by Christie Malry on FCAblog asks whether the GAAR is about scope or timing.

Scope means catching schemes that would otherwise escape because they legally 'work', and need legislative change to kill them, which will not be required once a GAAR comes in.

Timing means that HMRC are confident that the schemes will eventually be struck down by the courts, but a GAAR will kill them off at inception.

Neither of these two options seems quite right to me. My Tolley colleague Ben Saunders is closer to the mark in his comment on the post, saying that it is "about shifting the perception of the success of tax avoidance schemes rather than actually tackling them."

It's not about scope or timing, except as subsidiary factors. The real problem is resources.

HMRC could keep track of all the schemes out there through DOTAS and make sure they were all shut down, but that involves a lot of work from highly-skilled people who are in short supply and overstretched.

HMRC could take all the dodgy schemes to the tribunal and on through the courts, but that involves a lot of work from ... you get the picture.

Much better to make us self-policing; persuade us that schemes no longer work, so that they are no longer entered into.

As soon as you see that this is what is happening, it makes sense of a lot of other odd decisions by HMRC and the Treasury

Don't investigate offshore tax evasion, just get people to come forward in exchange for a reduced penalty.

Don't investigate cash traders, just persuade law-abiding taxpayers that it is unacceptable to accept an offer of "knocking the VAT off for cash".

I don't have too much of a problem with either the ODF or the comments made by David Gauke.

I do have a growing concern that those who ignore them are not at as much risk of investigation as they should be, becasue HMRC do not have the people to do the necessary digging.

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