The House of Commons took a little over two and a half hours on Tuesday to debate and pass a Finance Bill that has been reduced drastically from the original 135 clauses and 29 schedules to 63 clauses and 11 schedules. Among the provisions dropped were those on making tax digital, corporate loss relief and interest deductibility, VAT in relation to fulfilment houses, and penalties for enablers of defeated tax avoidance schemes.
The decision to shorten the Bill, leaving most of the complex and controversial clauses until a post-election Finance Bill, was welcomed by CIOT president Bill Dodwell, who called it a ‘sensible, pragmatic approach from the government and opposition’.
Paul Aplin, vice president of the ICAEW, said that the removal of the making tax digital provisions from the bill was the right thing to do. ‘MTD represents one of the biggest changes to tax administration in a generation and it needs proper Parliamentary debate. The recent reports from the House of Commons Treasury Committee and the House of Lords Economic Affairs Committee show how much political interest there is in MTD and MPs need an opportunity to debate the measure thoroughly: the deferral creates that opportunity. It also means that we should have a better idea of how the software market is developing and of initial experiences from those participating in the pilot programme when the debate takes place.’
At the start of the Commons debate, Financial Secretary to the Treasury, Jane Ellison, confirmed that the government would legislate for the remaining provisions ‘at the earliest opportunity, at the start of the new parliament’. Regarding making tax digital, the financial secretary said the government remains ‘committed to the digital future of the tax system’ and would ‘pursue those measures in a Finance Bill in the next parliament’.
The CIOT called for the government to make a ‘clear statement’ on whether the dropped measures would be reintroduced with their original timings, particularly those with an April 2017 start date, or whether some will have their introduction delayed until a later date.
A group of amendments were also agreed in relation to the remaining provisions. The main ones were:
Clause 7 and Sch 1 (workers’ services provided to public sector through intermediaries), correcting a technical error in the definition of ‘public authority’, which had the effect of unintentionally bringing some private sector retail businesses within the scope of the new rules because they provide services on behalf of the NHS;
Clause 8 and Sch 2 (optional remuneration arrangements), adding ITEPA 2003, s 307 to the list of excluded exemptions, so that the provision of retirement benefits remains exempt when provided under optional remuneration arrangements. The amendments do not extend to the provision of death benefits;
Schedule 3 (overseas pensions), ensuring that the grandfathering of lump sums paid to UK residents out of specialist pension schemes for those employed overseas (s 615 schemes) works properly, and that the entitlement under all types of s 615 scheme can receive this beneficial treatment; and
Clause 18 and Sch 4 (offshore transfers), ensuring that the overseas transfer charge on pensions is restricted so that it operates as intended. Amounts of charge refunded will not be retested against the individual’s lifetime allowance more than once; time periods in relation to the charge are restricted; and information requirements are extended so that individuals, scheme administrators and scheme managers are required to provide the necessary information.
The amended House of Lords version of the Bill, reduced to a mere 148 pages, is available at www.bit.ly/2n0zWoA.
The House of Commons took a little over two and a half hours on Tuesday to debate and pass a Finance Bill that has been reduced drastically from the original 135 clauses and 29 schedules to 63 clauses and 11 schedules. Among the provisions dropped were those on making tax digital, corporate loss relief and interest deductibility, VAT in relation to fulfilment houses, and penalties for enablers of defeated tax avoidance schemes.
The decision to shorten the Bill, leaving most of the complex and controversial clauses until a post-election Finance Bill, was welcomed by CIOT president Bill Dodwell, who called it a ‘sensible, pragmatic approach from the government and opposition’.
Paul Aplin, vice president of the ICAEW, said that the removal of the making tax digital provisions from the bill was the right thing to do. ‘MTD represents one of the biggest changes to tax administration in a generation and it needs proper Parliamentary debate. The recent reports from the House of Commons Treasury Committee and the House of Lords Economic Affairs Committee show how much political interest there is in MTD and MPs need an opportunity to debate the measure thoroughly: the deferral creates that opportunity. It also means that we should have a better idea of how the software market is developing and of initial experiences from those participating in the pilot programme when the debate takes place.’
At the start of the Commons debate, Financial Secretary to the Treasury, Jane Ellison, confirmed that the government would legislate for the remaining provisions ‘at the earliest opportunity, at the start of the new parliament’. Regarding making tax digital, the financial secretary said the government remains ‘committed to the digital future of the tax system’ and would ‘pursue those measures in a Finance Bill in the next parliament’.
The CIOT called for the government to make a ‘clear statement’ on whether the dropped measures would be reintroduced with their original timings, particularly those with an April 2017 start date, or whether some will have their introduction delayed until a later date.
A group of amendments were also agreed in relation to the remaining provisions. The main ones were:
Clause 7 and Sch 1 (workers’ services provided to public sector through intermediaries), correcting a technical error in the definition of ‘public authority’, which had the effect of unintentionally bringing some private sector retail businesses within the scope of the new rules because they provide services on behalf of the NHS;
Clause 8 and Sch 2 (optional remuneration arrangements), adding ITEPA 2003, s 307 to the list of excluded exemptions, so that the provision of retirement benefits remains exempt when provided under optional remuneration arrangements. The amendments do not extend to the provision of death benefits;
Schedule 3 (overseas pensions), ensuring that the grandfathering of lump sums paid to UK residents out of specialist pension schemes for those employed overseas (s 615 schemes) works properly, and that the entitlement under all types of s 615 scheme can receive this beneficial treatment; and
Clause 18 and Sch 4 (offshore transfers), ensuring that the overseas transfer charge on pensions is restricted so that it operates as intended. Amounts of charge refunded will not be retested against the individual’s lifetime allowance more than once; time periods in relation to the charge are restricted; and information requirements are extended so that individuals, scheme administrators and scheme managers are required to provide the necessary information.
The amended House of Lords version of the Bill, reduced to a mere 148 pages, is available at www.bit.ly/2n0zWoA.
