However, there are differences in approach. Accordingly, while former Chancellor Kenneth Clarke launched his "spend to save" initiative on the grounds that targetting transgressors would make life fairer for everyone, he stopped short of proposing a general anti-avoidance rule, as exists in other countries.
This Government, though, seems to have other ideas. Tax accountants have broadly welcomed the continuation for the moment of legislation aimed at stopping specific wheezes, but in his first Budget Mr Brown said he had asked the Inland Revenue to start consulting on a general anti-avoidance rule. And in the papers relating to last week's pre-Budget statement it was indicated that it a law may be drafted by the middle of next year.
But how useful would such a measure be? The Tax Law Review Committee of the Influential Institute for Fiscal Studies has just spent 18 months studying the way in which UK governments tackle tax avoidance. Since it has a wide-ranging membership, its views, published last week, merit close attention. It concludes that, while a general anti-avoidance rule could deter avoidance, specific legislation should remain the key weapon.
Having made clear its preference for a rule established by Parliament over one developed by the judicial committee of the House of Lords, the committee stresses that any rule must be sensibly targeted, with clear exemptions for abusive transactions. It also says measures must be incorporated to safeguardtaxpayers' interests and that there must be an advanced clearance procedure. Moreover, Inland Revenue departments must have the resources to ensure that they can administer it properly without inhibiting legitimate commercial and private activities.
Graham Aaronson, the QC who chairs the committee said: "Early discussions reflected the many different views you would expect on this topic. Nevertheless, a common position has emerged and the report is the concise view of the committee. This is particularly significant given the widely differing tax backgrounds and prospectives of its members. Accordingly the Government must give full weight to the committee's criteria for a GAAR. The committee would vehemently oppose a provision that failed to meet these requirements."
Malcolm Gammie, the committee's Research Director, added that a general rule was never a complete answer to avoidance but most OECD countries adopted one in some form. The issue was whether it is for the courts to develop one, as in the USA, or whether parliament should intervene, as had been the case in Canada, Australia and New Zealand.
Whatever the approach adopted, the committee's members acknowledged the emotive nature of the subject. In his preface to the report Lord Howe, the committee's president, quotes Professor Brian Arnold, who is closely associated with the development of the rule in Canada, as saying: "The issue of tax avoidance raises fundamental questions about the relationship between a taxpayer and the state. The issues raised by a general anti- avoidance rule go to the foundations of a country's tax system; they should be debated rationally on an ongoing basis."Reuse content