We may take counteraction under the Scottish GAAR against any tax avoidance arrangement which we consider to be artificial (see RSTP8005).
A tax avoidance arrangement is an arrangement where obtaining a tax advantage (see RSTP8001) appears to be the main purpose, or one of the main purposes, of the arrangement. The test for determining whether or not an arrangement has such a purpose is that it would be reasonable in all the circumstances to conclude that it did.
We do not therefore need to prove that obtaining a tax advantage is the sole or main purpose of the arrangement, only that it is one of the main purposes. A defence against a scheme being counteracted by us under the Scottish GAAR cannot be made on the basis that obtaining the tax advantage was secondary to an apparently legitimate commercial (or other) purpose, provided that it is one of the main purposes. But a defence could be mounted that the tax advantage was incidental, and not one of the main purposes to an otherwise commercial transaction.
An ‘arrangement’ includes transactions, schemes, actions, operations, agreements, grants, understandings, promises, undertakings or events (whether legally enforceable or not) either individually or combined in parts and stages.
In determining whether a tax avoidance arrangement has resulted in a tax advantage, we may take account of the amount of tax that would have been payable in the absence of the arrangement.
Ref ID
RSTP8004
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