GAAR Advisory Panel opinions: arrangements using bonds, gilt options, additional contributions and 'cooling off rights'

Released 20 May 2019

The GAAR Advisory Panel has issued two opinions that arrangements using bonds and gilt options to disguise remuneration and extract value were abusive tax arrangements.

The General Anti-Abuse Rule (GAAR) Advisory Panel opinion of 11 April 2019: employee rewards using a second hand bond, gilt options, additional contributions and 'cooling off rights' sets out the GAAR Advisory Panel’s opinion that the passing of rewards to employees/shareholder via joint acquisition by company and employee of a second hand bond, and use of gilt options, additional contributions and “cooling off” rights was not a reasonable course of action in relation to the relevant tax provisions. The arrangements were comparable to a cash bonus to the individual as remuneration.

The GAAR Advisory Panel opinion of 12 April 2019: extraction of value using a second hand bond, gilt options, additional contributions and 'cooling off rights' sets out the GAAR Advisory Panel’s opinion that the extraction of value by shareholders via joint acquisition with the company of a second hand bond, and use of gilt options, additional contributions and “cooling off” rights was not a reasonable course of action in relation to the relevant tax provisions. The arrangements were comparable to a dividend or other cash distribution with the funds being credited to the shareholders company loan accounts.

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