RSTP8001 - Tax avoidance and the Scottish GAAR

Introduction to Chapter 8 of the RSTPA 2014 guidance covering tax avoidance in relation to the devolved taxes and the Scottish General Anti Avoidance Rule.

We have a statutory duty under section 3(2)(d) of the RSTPA 2014 to protect the revenue against tax evasion and tax avoidance (see RSTP8002). We will do this through robust but proportionate compliance activity, in partnership with Registers of Scotland (for LBTT), the Scottish Environment Protection Agency (for SLfT) and, where appropriate, HMRC and other public bodies including Police Scotland.

We may take counteraction (see RSTP8006) against any tax avoidance arrangements which we consider to be artificial and relate to the devolved taxes (see RSTP8003). The principal rule providing for counteraction is the Scottish General Anti-Avoidance Rule (or ‘Scottish GAAR’) which is set out in Part 5 of the RSTPA 2014.

Arrangements that are not artificial as defined by the RSTPA 2014 will not be liable to counteraction under the Scottish GAAR.

The Scottish GAAR is intended to operate in tandem with Targeted Anti-Avoidance Rules (TAARs) contained in devolved tax legislation (the LBTT(S)A 2013 and LT(S)A 2014 ) and the ‘Ramsay principle’ of purposive statutory interpretation applied by the Scottish courts and tribunals (see Aberdeen Asset Management v HMRC [2013] CSIH 84). The Scottish GAAR is therefore inconsistent with the Ayrshire Pullman Motor Services doctrine (see Ayrshire Pullman Motor Services v Inland Revenue Commissioners [1929] 14 TC 754). 


In relation to LBTT, the Scottish GAAR allows for counteraction measures to be taken in a wider range of circumstances than is the case for UK Stamp Duty Land Tax (SDLT). The Scottish GAAR is therefore wider than the anti-avoidance provisions of sections 75A to 75C of the Finance Act 2003 and the UK GAAR in Part 5 of Finance Act 2013. All of the avoidance schemes which have been defeated in the context of SDLT, whether by legislative change or in litigation, would be ineffective under the Scottish GAAR.

The Scottish GAAR provisions have potential effect in relation to all tax avoidance arrangements entered into on or after 1 April 2015 (but see RSTP8005 for one important exception).

This guidance covers those provisions and reflects our general view, at the time of publication, about what does and does not constitute an artificial tax avoidance arrangement for the purposes of the Scottish GAAR as set out in the RSTPA 2014. This will be applied subject to the specific facts of particular cases. We will review and update this guidance to reflect changing practices, any relevant jurisprudence and the outcome of any counteraction which we have undertaken in relation to the Scottish GAAR.

This guidance must be taken into account by a court or tribunal in deciding proceedings before either which relate to the Scottish GAAR (see RSTP8008). 


RSTPA 2014 section 62

RSTPA 2014 section 67

RSTPA 2014 section 72

Unless indicated otherwise, in this guidance chapter:

  • ‘tax advantage’ does not have an exhaustive definition but includes in particular:
    • relief or increased relief from tax;
    • repayment or increased repayment of tax;
    • avoidance or reduction of a charge to tax or an assessment to tax;
    • avoidance of a possible assessment to tax; and
    • deferral of payment of tax or advancement of a repayment of tax;

RSTPA 2014 section 65

  • ‘we’, ‘us’ or ‘our’ means Revenue Scotland. ‘We’, ‘us’ or ‘our’ also means Registers of Scotland or the Scottish Environment Protection Agency where either is carrying out a function delegated to it by us under section 4 of the RSTPA 2014; and
  • ‘you’ or ‘your’ means the person who we believe has received a tax advantage from an artificial tax avoidance arrangement;

The guidance is structured as follows: