PracticeConsultingComment – Get ready for Brown’s big bag

Comment - Get ready for Brown's big bag

Apart from last-minute tinkering, Gordon Brown’s Budget is in the bag. By any account – even government sources – it’s going to be a whopper.

Some pundits forecast Brown’s package could be up to 800 pages long – which is twice the size of any previous Budget.

The Chancellor’s speech will probably be the usual hour of worthy announcements designed to make the headlines on Wednesday morning. But it is the detail in the Budget document, which is released as he sits down, that is likely to invoke the anger of the accountancy profession.

He is likely to continue the long-standing attack against tax avoidance.

Kenneth Clarke reignited the anti-avoidance touch-paper in his Spend-to-Save Budget in October 1996, and it seems Brown isn’t keen to let up. As Clarke put it, the ‘ingenious wheezes’ devised by accountants are in the firing line. Up to 200 measures are set to be included in the Budget, each focusing on a perceived tax dodge used by accountants.

But this rant against avoidance and devious accountants isn’t well aimed.

Professionals charged with mitigating a client’s tax liability are, on the whole, simply using existing legislation to best advantage.

There are a few unscrupulous types who will twist the law, but does their action merit a wholesale general anti-avoidance rule designed to outlaw the practice?

Instead of producing yet more legislation – which will be open to interpretation and legal testing – the government should concentrate on simplifying the existing tax law, so that its purpose is beyond question.

The actions of the Tax Law Review Committee to bring about this aim should be applauded. Instead, Brown is busy pulling draftsmen off the project to work on his Finance Bill. As a result, the five-year completion deadline is suffering inevitable slippage. It is a vicious circle. As long as the work to simplify the UK’s 6,000 pages of tax law is treated as a second-class priority it will never be completed.

All we will see is the profession finding new and legitimate ways around the measures introduced on Tuesday.

Jon Bunn is news editor of Accountancy Age.

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