Application of General Anti-Abuse Rule (GAAR) to National Insurance
12.The Government announced at Budget 2012 that it had accepted the recommendations of the Aaronson Report to introduce a GAAR targeted at abusive tax avoidance schemes. The GAAR was introduced by Part 5 of the Finance Act 2013.
13.The GAAR, as this Act would apply it with modifications, is designed specifically to target only those NICs arrangements which are regarded as abusive. The rules will consider whether an arrangement is abusive, by considering whether the arrangement can reasonably be regarded as a reasonable course of action. This is known as the “double reasonableness” test - and if it cannot, then any resulting NICs advantage would be counteracted by making adjustments to charge the right amount of NICs.
