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Finance Bill sets new record for complexity

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1st Apr 2008
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Traditionally, the Finance Bill has never been a simple matter, but Darling’s inaugural budget has reached new levels of complexity. When the Treasury finally published the Bill last Thursday, it needed 1,143 pages of explanatory notes – the most ever required.

The Bill itself, at only 443 pages, is not the longest ever Finance Bill presented to government. That honour goes to the Prime Minister, who notched up 607 pages in 2006, but these only needed 466 pages of explanatory notes. All in, this year’s Finance Bill is the longest yet.

“This is another damning indictment of the sheer complexity of the current tax system,” Liberal Democrat shadow chancellor Vince Cable told AccountingWeb. “This Government’s obsessive tinkering with Britain's taxes during the last decade has created a system no normal person can understand.”

Chas Roy-Chowdhury, head of taxation at ACCA, said simplification was desperately needed, going so far as to say as to call for an independent tax policy committee to operate much in the manner as the Bank of England’s monetary policy committee.

“Such a body would make for an efficient UK tax system – one which is stable, certain, simple and fair,” he argued.

Meanwhile, the ICAEW called for the Bill to be added to. Francesca Lagerberg, chairman of the ICAEW tax faculty, said a statutory definition of residence was needed for the employers of internationally mobile workers.

The trend for increasingly complicated budgets appears to have kicked in prior to the election of the Labour government. In 1996, Kenneth Clarke broke the then record for length with a little over 400 pages, explanatory notes excluded, with a Bill The Independent said had “stunned accountants with its complexity”.

In the intervening years, it appears Britain’s accountants have had no choice but to put up with far longer and more complicated statute (in the 1950s, Finance Bills were rarely much longer than 100 pages). Meanwhile, the department which will have to deal with the Bill’s 160 clauses, HMRC, is shrinking rapidly.

“HMRC has had to shed 12,500 staff by this April,” said a spokesperson for the Public and Commercial Services Union. “They have a target to reduce headcount by a further 12,500 under the remaining three years set by the Comprehensive Spending Review, as well as mandatory year-on-year budget cuts of 5%, which will see 200 offices closures, all at a time when they have to do more.”

The Union has warned there will come a point when the department – and the tax system itself – will cease to function.

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