What does the election mean for tax agents

13th Dec 2019
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Its all over now bar the shouting.  Boris Johnson has a working majority which will last for at least four years.   St Ives is the only constituency not yet declared (because of bad weather preventing the collecting of ballot boxes from the Scilly Isles) and whether that is taken by the Lib Dems or not - which remains possible, but unlikely - the Conservatives have a working majority.

Personally I would expect them to want a general election earlier in the year than December. Hence I would not expect them to go the full five years.  However, we can expect the next election now to be in 2024.   We will leave the EU with the Working Agreement at the end of January 2020 and then move on to negotiating a FTA.  There are complications in dealing with the FTA, but what the DUP thinks about it no longer matters to the Prime Minister and I would expect the government to get an authority to settle the details without too much reference to parliament.

In the mean time life goes on.  Tax returns need to be submitted and accounts sent to Companies House.  It can be a bit of a mystery as to where policy ideas come from.  Sometimes they come via the political parties, but often they come from somewhere in the machinery of government and are then adopted by ministers.

We have some idea what is happening to the rates of tax at least for the first fiscal year.  Exactly where things go after that will not be that clear.  Personally I would prefer that we remained within the EU. However, the fact that there is now some certainty as to what is going to happen will result in greater investments.  At the time of writing this (10am on Friday morning) domestic banking shares have bounced up (RBS 10.8% BARC 8.1%) as the market expects the domestic economy to pick up now that there is a background of some certainty against which businesses can invest.   Normally about 35% of growth in cash GDP feeds into additional government revenue so the government should gradually get a bit of flexibility although perhaps not enough to fulfil all the expectations from the election campaign.

Digital Tax is one of the key issues of concern of Tax Agents.   This is the sort of policy that has developed within the machinery of government internationally rather than through the political parties.  However, no political party would be likely to oppose the principle and the government have already endorsed this approach

 The UK has chosen a minimalist approach to this without requiring taxpayers to submit all the details of transactions to the tax authorities unlike other countries.  It would now be expected that Making Tax Digital will be extended to Income Tax and Self Assessment in 2022.  Although HMRC have talked about making it mandatory for people with SA income of over 10,000 I would not be surprised if they limited the number of mandatory accounts at the start.   However, I have not discussed this with HMRC.

The focus post Patisserie Valerie and Carillion on the reliability of audits is likely to remain.  Resolving some of the questions of Brexit will enable more political attention to other matters and this is clearly an issue where things could improve.

However, the implication of the General Election for Tax Agents and Auditors is essentially BAU.