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Digital tax among finance bill measures shelved

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More than half of the finance bill has been put on hold until after the general election to allow more debate on dozens of controversial measures, including plans to force landlords and small businesses to keep digital records.

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The decision to remove 72 out of the 135 clauses before the legislation was rushed through parliament in just two hours on Tuesday has dramatically reduced the size of a bill that would otherwise have been the longest in history. Labour refused to nod through many clauses, prompting Philip Hammond, the chancellor, to say that its insistence on dropping anti-avoidance measures would “give the lie to everything that they’re saying about being tough on tax avoidance and evasion”. Labour has argued that measures that aimed to close tax loopholes did not go far enough and tougher action was needed against tax avoiders. Jane Ellison, a Treasury minister, told MPs on Tuesday that the government would legislate for the postponed measures, which would make a significant contribution to the public finances, “at the earliest possible opportunity at the start of the next parliament”. The Chartered Institute of Taxation, a professional body, welcomed the announcement, but said there was still uncertainty over whether all the measures would be introduced on the date originally planned. Bill Dodwell, president, called on the government “to make a clear statement about whether — if re-elected — all of the clauses dropped will be reintroduced on the original timetable”. Ms Ellison said it was the government’s decision to delay the legislation for digitising the tax system, which was made “in light of the pressures on time” to allow for proper consideration. The move was widely welcomed by tax experts who want more debate about the ambitious initiative that will require small businesses to send digital records to HM Revenue & Customs using computers or smartphones every three months. Paul Aplin, a partner of AC Mole & Sons, an accountancy firm, said the deferral would allow for a longer, more informed discussion about the plans once there was early evidence from users testing out software designed for the “making tax digital” (MTD) programme. He said: “Making tax digital is the biggest change to tax administration in a generation and it is vital that parliament has time to debate the measures fully.” Mr Dodwell said there was a “serious chance” that the government would be forced to delay the introduction of the programme as a result of the election. He said it would be hugely valuable to have a longer transition period to allow businesses to get to grips with the software before they were required to make quarterly reports. It was conceivable the second finance bill could be rushed through after the election and receive Royal Assent in July, although it was more likely to be in the autumn, he added. With the possible exception of the digital plans, tax experts said the delay was unlikely to affect the starting dates for the measures. Some had already come at the beginning of April. Frank Haskew, head of the tax faculty at the ICAEW, an accountancy institute, said the uncertainty created by measures being implemented before they become law was a longstanding problem, although it was likely to be solved when the Budget was moved to the autumn. “It is hugely unsatisfactory to be subject to rules when you have not got the legislation in force. We have been living with that for a long time,” he said. The decision to delay large parts of the finance bill was widely welcomed by tax experts. Dawn Register, partner at accountancy firm BDO, said there was simply not enough time or capacity to properly scrutinise such complex measures. She said: “From our perspective, the most significant measures which need longer parliamentary debate include making tax digital, the requirement to correct and dealing with non-doms.” Dominic Stuttaford, head of tax for Europe, Middle East, Asia and Brazil at Norton Rose Fulbright, a law firm, said the decision was “a pragmatic solution allowing more time for some very complex legislation to be refined”. Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don’t cut articles from and redistribute by email or post to the web.