After six long months the Finance Bill 2016 was given Royal Assent on 15 September 2016, so becomes the Finance Act 2016.
The date the act is passed (the date of Royal Assent) is important as it marks the day certain parts of the law come into effect. There are around 40 such amendments that hang on the day of Royal Assent in this act.
Many other additions to the tax law are deemed to come into effect from 6 April 2016, or 1 April 2016 for companies, or possibly 1 April 2017, 2018 or 2019. Where the existing law is thought to be defective the changes have retroactive effect. This is the case with the entrepreneurs’ relief changes in sections 84 to 86, which are back-dated to 3 December 2014 and 18 March 2015.
Where the change in the law is required to counter some perceived tax avoidance it comes into effect the day the law is announced to Parliament. For example, the “Transactions in UK land” provisions in sections 76 to 81 which may hit UK property investors.
That is a classic example of “shoot-now” legislation which was not consulted on in advance. HMRC has said those new provisions are not aimed at UK landlords, and they will provide guidance to explain why, but that’s not what the law says. So once again we are taxed by law and untaxed by HMRC guidance.
Weight of the law
I must say it is such a “joy” to see another 662 pages of tax legislation contained in FA 2016 added to the 19,000 or so pages already in force.
In fact, it’s not easy to precisely calculate the number of pages which make up the UK tax legislation, as not all the law is reproduced in one place. The CCH red and green tax volumes, or Tolley's yellow and orange tax handbooks, include the tax statutes, and a large number of the tax regulations (statutory instruments), helpfully listing those regulations which are not reproduced. Both publishers also include additional materials such as; HMRC statements, concessions, press releases and codes of practice which are needed to interpret the legislation, which obviously adds to the length of the law volumes.
The Office of Tax Simplification concluded that the length of the tax legislation is not the only factor which contributes to its complexity, but it is a psychological one. Indeed, it is a physical one, as the current yellow and orange volumes weigh about 12.3kg!