The Government is consulting on a new general anti-abuse rule to tackle abusive tax avoidance schemes.

This rule was proposed by Chancellor George Osborne in the Budget in March as part of a new approach to tax policy making and strategic approach to the risk of avoidance.

It follows an independent review led by Graham Aaronson QC who concluded a targeted rule would deter artificial tax avoidance schemes and contribute to a level playing field for businesses. This was instead of a broad spectrum general anti-avoidance rule which, Mr Aaronson said, would not be beneficial to the UK tax system.

The GAAR will apply to main direct taxes, National Insurance and Stamp Duty Land Tax. Further taxes such as Inheritance tax may be added later if appropriate.

David Gauke, exchequer to the secretary, said: “The introduction of a GAAR will strengthen our anti-avoidance strategy, complementing the tools HMRC already has at its disposal and acting as a deterrent to those engaging in artificial and abusive avoidance schemes.

“The rules we are consulting on from today will effectively tackle such schemes, while minimising the impact on the vast majority of taxpayers who pay a fair share.”