Snap general election called: Accountants react

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Tom Herbert
Business Editor
AccountingWEB
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Theresa May’s decision to call a snap General Election may have come as a surprise to many, but accountants and business groups were quick to give their verdict on how this could affect the economy.  

Budgets and Finance Bills

With one Budget behind us this year and another promised in November, it is unlikely that a third Budget in 2017 is high on voters’ wish lists, but this may be what they will get.

Even if, as predicted by many political pundits, the Conservative Party gains a larger majority it is not certain that the current Chancellor will be in post, particularly after last month’s climb-down over Class 4 NICs.

A new occupant of 11 Downing Street is likely to want his or her own Budget to address issues such as Brexit, productivity and the ongoing austerity programme, and there is recent precedence for an emergency July Budget following an election victory.

Tax expert and AccountingWEB regular Giles Mooney tweeted that a large majority could see a Budget after the election:

Mooney also referred to the Finance Bill, which is having its second reading today. In its current form the largest Finance Bill in the history of UK tax legislation is unlikely to get through Parliament, which will rise on 4 May to start on the campaign trail. The Bill is likely to either be slimmed down to a few clauses to get it through or put it on ice.

Tax locks

Further tax considerations of the election include manifesto promises around tax. The ‘white van man’ controversy caused by the Class 4 NIC U-turn cost the government a huge amount of money, and they will not wish to be hamstrung by further tax locks or manifesto promises.

Any new election manifesto from the Conservatives is unlikely to mention tax locks at all, and may well do away with other locks such as the triple lock on pensions.

However, former pensions minister and Royal London's director of policy Steve Webb believes that the snap election has put the triple lock “up for grabs”.

“The Conservatives face a tricky choice now that Labour has pledged to retain the triple lock,” said Webb. “With inflation approaching 2.5%, the cost to the Treasury of the triple lock becomes relatively small. If the Conservatives were to decide to scrap the triple lock in the weeks before a General Election it would be a sign of supreme confidence about the likely outcome of that Election.”

Making Tax Digital

AccountingWEB’s consulting tax editor Rebecca Cave believes the election will further slow down the MTD juggernaut.

“There are a huge number of regulations that need to go through to make MTD work,” Cave told AccountingWEB. “They now cannot be passed while Parliament is not sitting - they’ll be put on ice. This isn’t a big problem in the short term because we’re not starting MTD legally until April 2018 – the MTD pilot is just experimental.

“However, for the more complex taxpayers – specifically corporations and large partnerships – we’re still waiting for the consultation documents. We’re not going to see them this side of the election, so from that point of view MTD for small businesses will carry on via the pilot scheme, but the rest of the MTD project may well be further delayed”.

Over on Any Answers AccountingWEB members saw the election as an opportunity to kick the scheme into the long grass through a concerted campaign of emails from accountants representing the SME sector.

On the thread Xero MD Gary Turner pointed out that MTD had already been politicised by Labour leader Jeremy Corbyn, who has threatened to scrap or pare down the programme.

Exports

A lot of focus around the UK’s Brexit negotiations has been around their impact on overseas trade. UK exporters have faced huge amounts of uncertainty around their business models, and international delivery firm ParcelHero’s David Jinks welcomed the announcement as giving UK exporters “a clearer idea of how Brexit will develop”.

Jinks also believes that whatever the result, Britain’s exporters will get a clearer picture of how things will develop in the long term. If the Conservatives win it will strengthen their hand in the forthcoming EU negotiations, while if an opposition party were to triumph it may enable the revisiting of the Brexit debate.

“While a re-run of the entire Referendum is unlikely, there may well be a greater emphasis on a soft Brexit,” said Jinks, “with compromises on immigration and other issues in order to ensure Britain remains part of the Single Market. This would eliminate exporters concerns over the impact of potential duties and taxes, not to mention long delays, at EU borders.”

 

What effect do you see the election having on your organisation? Or will it be business as usual?

Replies

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By mabzden
18th Apr 2017 17:30

I can't see a July budget myself. There almost certainly won't be a change of government, and the economic situation will be almost identical to that in March.

I can certainly see the no NI rise pledge being dropped and further action in the November budget to punish the criminal underclass sometimes known as the self employed.

I think the rationale for delaying MTD for small businesses (i.e. kicking it down the road until after the election) disappears but it's probably too late to revert to the original timetable.

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18th Apr 2017 20:00

"A new occupant of 11 Downing Street is likely to want his or her own Budget"

Let's face it, it'll be his own Budget...

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19th Apr 2017 15:02

The deadline of April 2020, to have all buisness onboard MTD, is surely now meaningless if the next Parliament will run to June 2022. MTD can thus be introduced more gradually without the political pressure of having to "close the tax gap" (or at least make an effort in that direction), by the end of the Parliament.

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19th Apr 2017 15:42

I think TM has made a mistake in going to the country. Maybe she doesn't want to be PM anymore.
With the Landlords fiasco and MTD I can see many Tories, especially those that voted for remain, voting Lib/Dem as a protest. All in all I see a hung parliament with Lib/Dems holding balance of power.
If she doesn't get the mandate she wants she will resign and BJ will take over.

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to johnjenkins
19th Apr 2017 16:12

The trouble is, not many people outside our circle know about MTD

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to SpreadsheetUser
19th Apr 2017 16:48

MP's have been lobbied so they will know the feeling. They ignore at their own peril.

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TM very much wants to, and will, remain PM. It took everyone by surprise but it is not a mistake going to the country. Trying to negotiate a decent Brexit with a wafer-thin majority and rebellion in the ranks would have been almost impossible. She needs a stronger poker hand.

Tony Blair will hook up with the Lib-Dems and pull in a few Tory remainers I'm sure. Most Tory remainers will go with TM with the aim of securing an EU-friendly Brexit.

Not that I personally wanted either outcome, but I cleaned up tax-free with bets last year on Brexit at 6-1 and Trump at 4-1. I'm betting on a large Tory majority in June.

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to [email protected]
20th Apr 2017 15:35

I'm not a betting man but I had Brexit and Trump. Trump was easy as America won't have a female president. You forget Michael, Landlords fiasco and MTD. Many methinks will vote Lib/Dem as a protest. Do you honestly think remain Landlords will vote for TM?
Whatever happens the run up will be great.

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to johnjenkins
20th Apr 2017 22:02

Sorry but not even the British public have memories that short that they'll forgive the Libdems for their betrayal of their voters and/or principles just to be the tories lapdogs. With an almost non-existant opposition it just a case of the size of the tory majority and that could mean a number of unusual financial decisions being made although what I have no idea...

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By sawebs
to johnjenkins
22nd Apr 2017 06:44

Don't forget the self-employed and limited company contractors. They will abandon the Tories en masse after the recent crusade against them - dividend tax (and reduction in the allowance); scrapping (effectively) the flat rate scheme; OmNICshambles; the botched changes to IR35 in the public sector and threat to roll out to the private sector with most PS contractors paying employment taxes although most are genuinely self-employed and get no employee benefits.

I think a lot of those affected will vote Lib Dem, Labour not being a credible alternative and the likelihood that Labour would be worse than Tories tax-wise.

All parties need to wake up and realise there are 5m votes out there up for grabs.

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20th Apr 2017 10:58

Considering the unpredictability of the UK People, I believe that assumptions of major landslides need to be taken with such major caution.

Plans should be in place in case of a change of outcome. Clients need to be kept aware every step of the way of the work we are all undertaking regardless of the results of the election.

I agree though, I hope that there will be some form of more gradual release of Making Tax Digital, as it still cannot continue in it's current form.

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By tedbuck
20th Apr 2017 11:52

Do we have a Chancellor? I thought he was just the visible face of the muppets in the Treasury who live in a world a bit different to mine.
MTD - they must be joking. If HMRC don't understand how to compute taxes the Treasury introduces there is obviously something of a problem.
Tax is now so complicated that they don't understand it without Tim Good's help so what chance does Joe Public have? A recipe for absolute disaster compounded by HMRC's systems which never seem to work anyway.
What on earth are the accountancy bodies thinking of allowing HMRC to get away with this nonsense without shouting it from the rooftops? I suppose they are too involved with more FRSs to make accounts less and less comprehensible by the people who pay our bills.
What a world!

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to tedbuck
21st Apr 2017 23:32

We have a profession dominated by the big 4, no longer accountancy practices but suppliers of overpriced consultancy services to the govt which are as far removed from accountancy as you can get. Are they going to say anything meaningful about a minor matter like tax? Troughs don't want to be taken away

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