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Introduction to Welsh GAAR

The UK general anti-abuse rule described in the General anti-abuse rule (UK GAAR) guidance note, does not apply to the Welsh devolved taxes. Instead, a separate general anti-avoidance rule (GAAR) applies to devolved taxes in Wales from 1 April 2018 (ie land transaction tax and landfill tax).

Welsh income tax is only partially devolved because the National Assembly for Wales can only set Welsh rates of income tax, although it has not done so and Welsh taxpayers continue to pay income tax at the same rates that apply to the rest of the UK (excluding Scotland). HMRC administers and collects Welsh income tax and the UK general anti-abuse rule continues to apply to income tax.

The Welsh GAAR is generally considered to be wider in scope than the general UK GAAR because it is an anti-avoidance rather than an anti-abuse rule. It does not look at ‘abusive tax arrangements’ in the same way as the GAAR that applies in the rest of the UK. Rather, it applies when the obtaining of