On the formulation of tax legislation – End the endless draft

There has been a series of major tax reforms where the input of professional, trade and consumer organisations seems to have accounted for very little in terms of reshaping government thinking. Double tax relief is a recent example.

How many of us made much of a dent in the voluminous Finance Bills of the last three years? If we did, did we still have the strength left to plough through the explanatory notes to confirm our grasp of the issues?

It cannot make sense to go on churning out new legislation as if the government’s performance is measured by the number of trees it helped to fell.

The formulators of new policy suffer from a failure to pick out the important issues and to consult properly on them. Look at the history of income tax, capital gains tax, IR35 and DTR. The Inland Revenue code of practice on consultation says: ‘Ministers intend, wherever possible, to consult both on the policy proposals themselves and the consequent legislation.’

This could have happened without giving away any big secrets, but in practice, it did not in the areas I have mentioned.

As a result, we have proposed changes which in turn lead to endless draft legislation to review, consultation documents and technical notes to comment upon and endless meetings to discuss all these various proposals. While we all wish to encourage full discussion of the issues, we would prefer there were fewer to discuss.

If the government’s performance measure is volume-related, it cheats by enacting badly drafted legislation which then requires large chunks of subsequent Finance Bills to amend.

Perhaps what the government needs is the equivalent of the Bank of England Monetary Policy Committee to monitor and propose tax legislation where considered necessary. A Tax Policy Committee (TPC) has a certain ring about it – it could help take politics out of tax. The government could then use the benefits system to do its political tweaking and enjoy longer holidays. – Chas Roy-Chowdhury is head of taxation at ACCA

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