Brexit & EconomyPoliticsKey tax measures shredded after falling victim to election

Key tax measures shredded after falling victim to election

Rush to pass Finance Bill leads to 26 measure announced in the Budget being dropped or held over until next time

The Finance Bill has been left in tatters, leaving accountants wondering
whether to “stick” or “twist” when advising individuals and businesses on
proposals that may become law in the future.

A total of 26 measures were either dropped or held over until the next
Finance Bill as the document was carved out in a rush to get the Bill made law.
This puts both advisers and their clients in the dark, said tax experts.

“It leaves everyone in limbo,” said Cathy Corns, tax partner at Mercer &
Hole.

“We have no idea what the next government will do. You can either claim it
and hope the law does change, or don’t claim it and possibly miss out.”
The Finance Bill, which gives HMRC the power to collect taxes for the next year,
fell victim to the battle for No 10 as the plans for the UK’s tax framework
going forward were pushed through before Parliament was dissolved.

Plans for a 50p a month broadband tax, a 10% hike on cider and the withdrawal
of relief on holiday homes were all dropped as the parties ­sidestepped the
controversial parts of the Bill.

Proposals to amend the worldwide debt cap legisl-ation on interest relief
were pushed back until the next Finance Bill.

This will do nothing to appease disgruntled FDs still holding out for clarity
in the long-running dispute on how controlled foreign companies are used.

The government is desp­erate to ensure the UK’s tax take is not dented by UK
companies claiming interest relief on debt funneled through an overseas
subsidiary.

Closer to home, a handful of reviews to HMRC powers deterrents and safeguards
were dropped, as were enhancements to capital allowances and venture capital
schemes.

For the parts that did make it through, there were no real surprises.

After the crackdown on excessive bonuses and tax avoidance, the new top rate
of income tax, the bank payroll tax and the restriction of personal allowances
were at the top of list.

Disclosure of tax avoidance schemes changes, which beefed up HMRC’s ability
to find out about loopholes, were also pushed through.

However, advisers are still warning that the speed at which the legislation
was pushed through could have serious knock-on effects.

“It is deeply unsatisfactory for such a lengthy Finance Bill to have so
little debate in parliament,” said John Whiting, the CIoT’s tax policy chief
last week.

Even for the measures that made the cut, advisers are worried that there
would be no chance to review the clauses of the bill properly for technical
defects.

“There will be no opportunity to press ministers for clarification on most of
the Bill’s contents. There will be no chance to discuss how most of these
detailed technical proposals will work in practice,” Whiting added.

Further reading:

Just
a few hours of scrutiny for Finance Bill as Election announced

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