The influential Commons Treasury Committee has rapped chancellor Alistair Darling for failing to consult in advance on his controversial withdrawal of Capital Gain Tax taper relief.
The Labour-dominated committee demanded he set out how he plans to mitigate the effect on small businessmen planning to sell up and retire within the next two years.
And in a report to Parliament today it made it clear the autumn pre-Budget report as stated in the Code for Fiscal Stability 'should be consultative in nature' - not one of two tax-changing budget statements each year.
Labour committee chairman John McFall, said: 'Changes such as this will generally benefit from consultation.'
He added: 'Tax simplification is a desirable objective, but the reforms of capital gains tax will have an immediate impact on many individuals and businesses that have sought to plan ahead.'
The committee said Darling had previously made it clear he would not make changes to CGT that could have unintended and undesirable consequences, but had done so regardless in the belief that they were inevitable side-effects in his drive towards 'good simplification'.
It accepted the desirability of the objective but voiced 'concern' as to the side-effects and called for a statement as to the extent to which Darling is prepared to engage in consultations.
The committee also called for urgent consultations on the crackdown on non-doms taking effect in April and warned that the implication of Treasury figures is that 4,000 of them will be the sole source of £800m additional revenue in 2009-10.
The news came as prime minister Gordon Brown hinted at further concessions on the move in a speech to the CBI.
'We will continue to listen and discuss with you the representations we have received about CGT, ensuring that we maintain reforms for a fairer and simplified system that rewards enterprise,' said Brown.
He promised the CBI 'a long-term approach to tax and deregulation including for Britain's four million small businesses.'
Brown said the government would continue to work with the CBI 'to continuously modernise and simplify our tax\regime and improve out tax competitiveness.'
Further reading:
CBI: CGT changes killing business spirit
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