UK Accounting Glossary
Abusive Tax Shelter is an investment scheme that claims to reduce income tax without changing the value of the user’s income or assets
In the USA, this is a financial arrangement (often involving complex transactions through a trust or partnership) that aims to reduces an entities liability to tax and is judged to serve no legitimate business purpose beyond this.
The Internal Revenue Service (IRS) frequently publishes a list of transactions that are considered abusive; any taxpayer who makes use of such an arrangement; or one that resembles it; may be charged back taxes plus interest.
In the UK, the General Anti-Abuse rules similarly aim to outlaw “artificial and abusive” tax shelters.
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This glossary post was last updated: 27th January 2019.