Finance Bill 2019: second reading

Finance Bill 2019 was published on 7 November and passed its second reading in the House of Commons on Monday 12 November. A Committee of the whole House will debate the following clauses over two days, not yet formally scheduled, but likely to be on Monday 19 and Tuesday 20 November.

• Clauses 5, 6, 8, 9 and 10 (income tax thresholds and reliefs).
• Clause 15 and Sch 3 (offshore receipts in respect of intangible property).
• Clause 16 and Sch 4 (avoidance involving profit fragmentation arrangements).
• Clause 19 (hybrid and other mismatches: scope of Chapter 8 and ‘financial instrument’).
• Clause 20 (controlled foreign companies: finance company exemption and control).
• Clause 22 and Sch 7 (payment of CGT exit charges).
• Clause 23 and Sch 8 (corporation tax exit charges).
• Clause 38 and Sch 15 (entrepreneurs’ relief).
• Clauses 39 and 40 (gift aid and charities).
• Clauses 41 and 42 (stamp duty land tax: first-time buyers in cases of shared ownership).
• Clauses 46 and 47 (stamp duty and SDRT).
• Clauses 61 and 62 and Sch 18 (remote gaming duty and gaming duty).
• Clauses 68 to 78 (carbon emissions tax).
• Clause 83 (international tax enforcement: disclosure arrangements).
• Clause 89 (minor amendments in consequence of EU withdrawal).
• Clause 90 (emissions reduction trading scheme: preparatory expenditure).

The remainder of the Bill will go to a Public Bill Committee, likely to start on 22 November and programmed to conclude no later than 11 December.

The Finance Bill is named Finance (No. 3) Bill, being the third Finance Bill of the 2017–19 parliamentary session. See bit.ly/2ARpJVc.

The CIOT has pointed out that just 37 of the 90 substantive clauses in the Bill, and 12 of the 19 schedules, were included in the draft legislation published for consultation in July. A small group of draft clauses were published at the Budget on 29 October, while legislation for a further group of measures was published for the first time in the Bill on 7 November without prior consultation. These measures included the new structures and buildings allowance and the carbon emissions tax.

Glyn Fullelove, chair of the CIOT’s technical committee, believes the timetabling of the Bill adds to a ‘scrutiny deficit’.

‘With just four parliamentary sitting days between the publication of a large amount of previously unseen legislation and the start of the committee stage, which is supposed to see detailed line by line scrutiny of the Bill, there is a real risk this bill will not get the scrutiny it should’, Fullelove commented.

The government also published a group of consultation responses on 7 November, outlining further work to be done in areas including:

• split payment for VAT, confirming the government’s intention to set up an industry working group;
• tackling the hidden economy through public sector licensing (conditionality), legislating in Finance Bill 2020 to introduce checks on the tax registration status of applicants for public sector licences, facilitated by a digital service;
• the role of online platforms in ensuring tax compliance by their users, with next steps to include improving HMRC guidance, exploring technological solutions for data-gathering, and consideration of a ‘PAYE-like’ withholding system as proposed by the OTS; and
• tax abuse and insolvency, confirming the government will include legislation in Finance Bill 2020 to make directors and other persons involved in tax avoidance, evasion or phoenixism jointly and severally liable for company tax liabilities where there is a risk that the company may deliberately enter insolvency.

GAAR advisory panel issues two new opinions

The GAAR advisory panel has issued two new opinions, each involving a form of contractor loan scheme and transfer of creditor rights to an employer financed retirement benefit scheme (EFRBS). In each case, the panel’s conclusion was that the entering into and carrying out of the arrangements was not a reasonable course of action in relation to the relevant tax provisions.

• Opinion of 11 October 2018: contractor rewards using loans, involved a contractor loan scheme involving transfer of creditor rights to an EFRBS (bit.ly/2DF38hb).
• Opinion of 12 October 2018: employee rewards using loans, involved arrangements designed to reward an employee by receiving his services through a third party, augmented by loans with creditor rights transferred to an EFRBS (bit.ly/2QIwEoT).