ICAS contributes to House of Lords inquiry
The autumn budget may have been cancelled by the Chancellor, but other elements of the annual UK Finance Bill process continue to roll on. We report on parliamentary consideration of the draft Finance Bill clauses and the ICAS contribution.
Tax policy making
Back in 2011 a helpful tax policy making model was established that brought welcome consistency and planning to the process of developing new tax legislation. However, recent events – Brexit and now Covid-19 – have led to parts of the process being ignored or truncated. None of this is helpful to developing sound tax policy or its effective implementation into tax law.
ICAS supports the principles set out in the 2017 policy paper ‘The new Budget timetable and the tax policy making process’ which were designed to increase predictability, stability and simplicity in the UK tax system and to address concerns that tax policy making was often piecemeal and reactive. A single autumn fiscal event is also essential to support the devolved nations in making effective tax policy.
Last year, the UK autumn budget was delayed until the following spring. The Finance Act 2020 received Royal Assent on 22 July and, perhaps with the hope of returning to the expected consultation process, some draft Finance Bill clauses (for Finance Bill 2020–21) were issued by HMT/HMRC on 21 July – these are expected to be included in the next Finance Act (FA 2021). The government aim is, where possible, to publish most tax legislation in draft for technical consultation before the relevant Finance Bill is laid before parliament. The consultation on draft clauses is intended to make sure that the legislation works as intended.
Some of the proposed measures in the draft Finance Bill clauses have already been subject to policy consultation, but with others this year the policy consultations were kept open over an extended period that has overlapped with the issue of the related draft clauses.
The House of Lords Economic Affairs Committee
The House of Lords Economic Affairs Committee has an interest in tax matters but its remit in relation to any Finance Bill is limited. As a result, the Finance Bill Sub Committee (FBSC), which is appointed each year, considers aspects of the Finance Bill from the point of view of issues of tax administration, technical clarification and simplification rather than on rates or incidence of tax.
The FBSC has examined a number of different topics of relevance to many taxpayers in recent years; for example, it has reported on Making Tax Digital for Business, The Powers of HMRC: treating taxpayers fairly and Off-Payroll working: treating people fairly, all of which ICAS has contributed evidence to.
This year the FBSC has decided to examine the following measures:
- New proposals for tackling promoters and enablers of tax avoidance schemes (ICAS submitted a response to the consultation on this recently)
- New tax checks on licence renewal applications (ICAS has not received any feedback from Members on these proposals; our evidence therefore concentrates on the broader issue of liaison between Westminster and the devolved administrations, given that licence renewal is a devolved matter)
- Amendments to HMRC’s civil information powers (ICAS submitted a response to the original consultation in 2018)
- Notification of uncertain tax treatments by large businesses (again, ICAS has submitted a response to the consultation)
- Corporate Interest Restriction (CIR) – technical amendments
The ICAS contribution
ICAS will be submitting written evidence and, alongside the ICAEW and CIOT, has been asked to give oral evidence on 5 October.
The ICAS Tax Board is responsible for putting forward the views of the ICAS tax community; ICAS also has a public interest remit, a duty to act not solely for its Members but for the wider good. From a public interest perspective, our role is to share insights from ICAS Members into the many complex issues and decisions involved in tax and financial system design, and to point out operational practicalities. We are delighted therefore that ICAS has been asked to contribute to the Finance Bill Sub Committee’s inquiry.