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AIA

Who is responsible for Clause 34?

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12th Jul 2008
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When HM Treasury decided to put the "own consumption" rule in Sharkey v Warner into clause 34, schedule 15 of this year’s finance bill, the official line (Hansard: May 20 2008) was that the change was in response to the requests of the professional bodies.

Something which ministers still maintain:

Hansard July 2 2008: Kitty Ussher, economic secretary to the treasury “…to explain why we are doing this. We have been asked to legislate on this by the normal types of body that one would expect—the trade associations and the accountancy and legal professions—because although the case law has been operating happily for the best part of 50 years, it seems that there is now some uncertainty in the system.”

Barrister Keith Gordon is a member of the CIOT tax technical committee and as such happens to work very closely with the other professional bodies. He therefore he knew that the CIOT, ICAEW and ICAS opposed the idea for putting Sharkey into law. If they opposed the idea, who were the accountancy and legal professions that the Treasury maintains were backing the move?

Baffled, he made a request to the Treasury under the FOI to determine which professional body was the culprit.

The Treasury has failed to respond in the 20 days allotted under the Act and by curious coincidence, this meant that Keith was unable to alert MPs to the inconsistency in the Treasury's argument in advance of the finance bill debate on the clause.

Another taxpayer safeguard bites the dust...

***

Objections to Clause 34 - Explained by the ICAEW:
Clause 34 and Schedule 15, Trade profits: changes in trading stock (paras 154 to 157)

"We are concerned that this runs counter to the move to align tax and accounting profits and recommend that appropriations to stock should follow the existing VAT treatment under which VAT is due on the cost price of goods applied to private use."

Clause 34 and Schedule 15, Trade profits: changes in trading stock - ICAEW written questions to HM Revenue & Customs (May 2008):

"Why does the proposed treatment of stock appropriated in the circumstances envisaged in the Finance Bill not follow the equivalent VAT treatment under which VAT is due on the cost price of goods applied to private use (article 74 of Council Directive 2006/112/EC of 28 November 2006)?
We also consider that as a matter of principle it is unhelpful that exceptions are being made to the overriding principle of following GAAP treatment required by section 42 Finance Act 1998, albeit we are aware of the argument that Sharkey v Werner could otherwise be viewed as overridden by section 42."

Useful links:
Taxpayers need statutory safeguards By Nichola Ross Martin
Wyman Symposium: Have HMRC's powers tilted too far?
Finance Bill: Sharkey v Warner - Bad ideas R Us By Simon Sweetman

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Replies (3)

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By k.gordon
17th Jul 2008 14:26

As soon as I find out ...
I can assure you that I will let readers know the outcome of my information request.

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By User deleted
16th Jul 2008 10:03

The mystery deepens,
Chas Roy-Chowdhury. head of taxation at the ACCA, denies any involvement from his institute, he says quite firmly, "You can count us out."


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By AnonymousUser
15th Jul 2008 07:58

I should be interested to know ...
... if Keith Gordon EVER received a response to his application under FoIA (albeit out of time) and, if so, what was that response?

Also, what is the remedy for a breach of FoIA? Does someone get prosecuted?

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