If tax advantages are found to arise from abusive arrangements and the GAAR comes into operation, HMRC can counteract the advantages by making an ‘adjustment’.

Such adjustments can be in any form including (but not limited to) an assessment (or modification of an assessment), disallowance or modification of a claim.

(FA 2013, s. 209(1) and (5))

Any adjustments required must be ‘just and reasonable’ and address directly (or indirectly if necessary) the tax arrangements but need not be limited to the tax where the advantage has arisen. Although an adjustment can be made with respect to any other tax, it must relate to a tax to which the GAAR applies.

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