On 6 December 2007, HM Treasury and HM Revenue & Customs published a joint consultation paper on a principles-based approach to financial products tax avoidance. Such an approach involves a departure from the recent trend to create targeted anti-avoidance legislation. Instead, a principles-based approach involves legislation that is light on detail but that instead embodies a fundamental principle to which taxpayers should have regard when structuring their affairs.

The consultation paper sets out draft legislation, adopting such an approach, for two areas: disguised interest and sales of income streams.

Comments on the draft legislation, and on the principles-based approach in general, are invited by 28 February 2008.