CIOT warns government against ‘rushing’ Finance Bill

The Chartered Institute of Taxation (CIOT) has written a letter to chancellor Philip Hammond, urging him against rushing through the Finance Bill without any real parliamentary scrutiny.

With the surprise announcement of a general election on 8 June, the timetable for the Finance Bill 2017­­ is likely to be curtailed, condensing the typical process of two days of House of Commons debate and 14-20 standing committee sessions, plus two days of report stage and third reading debate, into a single day for the committee and report stages.

As the current Finance Bill is the lengthiest to date at 762 pages, CIOT has warned against rushing through such extensive legislation without adequate scrutiny and an appropriate timeframe to make necessary amendments.

Some of the lengthiest sections of the Bill are “corporate interest restrictions” at 156 pages and “relief for carried-forward losses for corporates” at 116 pages.

Understanding the need to pass some form of a Finance Bill before the election, CIOT suggested that the government reduce the current Bill to its core elements that relate to the government’s revenue raising capacity and matters of urgency, e.g. renewing the provision of income tax, or anti-avoidance provisions. CIOT also recommended a post-election Finance Bill to reintroduce any dropped measures, when proper procedure and meaningful examination of the measures can be carried out.

In the letter, CIOT president Bill Dodwell said:

“I am writing on behalf of the Chartered Institute of Taxation to urge you not to rush through Parliament substantial tax changes prior to the forthcoming general election.

“We recognise the need to pass a basic Finance Bill before the election, containing those measures essential to the continuation of the tax system – primarily the renewal of income tax. This could also reasonably confirm changes to levels of duties announced on Budget day, and any other measures which are required urgently, such as anti-avoidance provisions. However, we believe most other measures should be left until a post-election Finance Bill where they can be scrutinised at greater length.

“This is not simply about the formality of parliamentary debate. Since the Finance Bill was published on 20 March, the Chartered Institute of Taxation has identified a number of changes that we believe are needed to the legislation on areas including in complicated areas such as loss relief and interest deductibility. No doubt other external bodies have identified concerns too. A truncated timetable – rushing through 762 pages of legislation in a single day or even two days next week – will not allow for adequate consideration of the matters we have raised.

“A post-election Finance Bill would also enable more of the framework for Making Tax Digital to be put in statute, rather than brought in through regulations.

“The CIOT acknowledges, and welcomes, improvements in the level of consultation on tax issues by the Government over recent years. Our recent report, with the Institute for Government and the Institute for Fiscal Studies, on Tax Policy Making included recommendations for better scrutiny by Parliament of new legislation. We hope you will be able to reassure us that these general improvements on consultation will not be undermined by the rushing through of a huge Finance Bill without the chance of amendments and scrutiny in the final days of this Parliament.”

The letter has been copied to the shadow chancellor and the chair of the Treasury Select Committee.

Related reading