Last month’s publication of the finance bill revealed a raft of new measures to clamp down on tax avoidance, but accountants have warned the government that it could result in a ‘flight from certainty’ in terms of tax legislation.
With a general election just around the corner, tax experts have expressed concern that there will be too little time to properly scrutinise the bill in detail, leading to unwieldy and incorrect tax legislation being introduced.
Ian Hayes, chairman of the ICAEW tax faculty technical committee, warned the Treasury that it must keep to its ‘normal and proper practice’ of publishing a shortened bill to allow for collection of taxes.
Other measures should be revisited after the election, he said. ‘We are concerned that there are a number of items in the bill that the government, at the behest of HM Revenue & Customs, will want to push and get through, particularly in the form of avoidance measures,’ said Hayes. The ICAEW has written to the paymaster general expressing its concerns.
The ICAEW pointed to several aspects that could lead to controversy and claimed that aspects of the anti-avoidance provisions could be in ‘potential breach of the EU Treaty’. It also claims some of the legislation could catch innocent transactions and that not enough time will be available to ‘properly digest’ it. ‘This could lead to a flight from certainty in terms of tax legislation with the details being added in secondary and even tertiary legislation,’ said Hayes.
Andrew Green, tax partner at Mazars, pointed to the irony of Gordon Brown’s Hampton Review announcement to cut red tape and bureaucracy. ‘At least 31 clauses are concerned with anti-avoidance proposals – the very thing that increases red tape,’ he said.
Paymaster general Dawn Primarolo published the bill on 24 March and it contained some of the most complex legislation in government. ‘Today’s finance bill introduces important measures to promote fairness and tackle tax avoidance,’ she said at the time.
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