Varney clears way for new procedures

The outcome of the Varney review appears to be significant. The former chairman of HM Revenue & Customs has proposed clearance procedures for businesses, something they had long argued for.

The detail will be interesting. How far do these go, on which areas? Some are mentioning business deals larger than £100m. I wonder whether managing things by size doesn’t give rise to criticisms that this hands an unfair advantage to big business, but let’s wait and see first.

Another thought that occurs is that this is quite a clever political idea. Businesses are hankering for lower taxes and, to a lesser extent, less of this silly anti-avoidance crackdown. By giving business this, the Chancellor can fairly say he has made the UK more competitive, without losing the moral high ground or giving in to the race to the bottom on tax.

And credit where credit is due: I suggested here that Sir David was not the man to do this job. Perhaps I was wrong on that front.

The final thought, and one that I think has the most significance, is this. Clearance procedures are not as simple as you might think. You need people to clear things. There is a reason why enquiries take a long time, and that is that some of the issues being discussed are very complex, and finding out the devil in the detail is expensive. Can the government possibly clear things within 28 days, AND carry out the Gershon savings?

More than that, this seems to presage two things: an effective general anti-avoidance rule in having the clearance procedure. And the handing back of compliance to the government and away from the taxpayer. Since self-assessment we have talked about taxpayers doing the taxman’s job. Now the onus is back on the taxman to make decisions about right and wrong.

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