Tax can't be simple with a heavyweight finance bill

by Kevin Reed

More from this author

30 Mar 2012

  • Comments
Stack of papers

IT SEEMS THAT the publication of the Finance Bill will put more pressure on paper stock, and will leave many tempted to access it purely online.

Coming in at 670 pages, the bill is believed to be the longest on record. Advisors are unimpressed, making it near impossible for parliament to provide scrutiny.

"That means full and proper scrutiny before publication is vital," said CIoT president Anthony Thomas.

Little time for scrutiny means that the proposed changes require lengthy and through consultation. For the most part, tax experts believe this has taken place.

Big tax issues around controlled foreign companies and patent box rules were given time to be formed.

But, as Thomas suggests, the child benefit withdrawal charge was "exposed" for the first time in the bill.

Such a large bill puts the government's policy of simplifying the tax system in some doubt.

"As the Office of Tax Simplification (OTS) battles to streamline the already complex landscape, the government has issued an eye watering three volumes of legislative bloating as the primary rules grow and grow. Their task was tough before; it's now becoming near impossible," said Grant Thornton head of tax Francesca Lagerberg.

Other aspects of the bill were more welcome. Amendments to the legislation have allowed non-doms to make investments in the UK without triggering a tax charge.

"The availability of this new relief is likely to substantially increase the amount that non-UK domiciled individuals are willing to invest here, which should make the UK more attractive as a location to do business," said Ernst & Young private client services partner Carolyn Steppler.

"However, it's only the left the door to the UK ajar rather than fully open. The bad news is that it remains a complicated relief to navigate. The conditions applying to the investment both before and after it has been made, has created a number of traps for the unwary, which could lead to unexpected tax bills.

"Overall, this legislation represents a real step forward in attracting inward investment."

Upcoming issues flagged up in the Budget are at the forefront of ACCA head of tax Chas Roy-Chowdhury's thoughts.

With stamp duty land tax rules to be put in place to effectively stop individuals using corporate structures to avoid tax, Roy-Chowdhury wants the May consultation to consider making sure the net is not spread too wide.

There are individuals that run businesses where property ownership is key. The government must make sure that genuine businesses are not hit by the incoming SDLT rules, he believes.

With some form of cash accounting for tax filing purposes likely to be introduced for micro-businesses, Roy-Chowdhury is concerned that they will think they can put their accounts together themselves.

Those businesses will miss out on having proactive accountants help them manage their finances, he says.

"[Accountants] that prepare tax returns for clients have the chance to give them a health check," says Roy-Chowdhury.

If clients pay more to engage with their advisor beyond just once-a-year tax filing then they will receive better engagement, he adds.

Image credit: Shutterstock

Visitor comments

blog comments powered by Disqus

Add your comment

We won't publish your address

By submitting a comment you agree to abide by our Terms & Conditions

Your comment will be moderated before publication

  • Send

Charterhouse Accountants

Finance Officer

Charterhouse Accountants, Beaconsfield, Permanent, Full Time, £ Competitive




Get the latest financial news sent directly to your inbox

  • Best Practice
  • Business
  • Daily Newsletter
  • Essentials


Search for jobs
Click to search our database of all the latest accountancy roles

Create a profile
Click to set up your profile and let the best recruiters find you

Jobs by email
Sign up to receive regular updates with the latest roles suitable for you



Why budgeting fails: One management system is not enough

If budgeting is to have any value at all, it needs a radical overhaul. In today's dynamic marketplace, budgeting can no longer serve as a company's only management system; it must integrate with and support dedicated strategy management systems, process improvement systems, and the like. In this paper, Professor Peter Horvath and Dr Ralf Sauter present what's wrong with the current approach to budgeting and how to fix it.


iXBRL: Taking stock. Looking forward

In this white paper CCH provide checklists to help accountants and finance professionals both in practice and in business examine these issues and make plans. Also includes a case study of a large commercial organisation working through the first year of mandatory iXBRL filing.