The zombie Finance Bill has landed. Like the undead rising from the grave, 72 clauses and 18 schedules have been resurrected from the pre-election Finance Bill.
The new bill is referred to as Finance Bill 2017-19 as it is the first Finance Bill to be published in this session of Parliament, which will run from June 2017 to June 2019. Confusingly the earlier Finance Bill published on 20 March 2017 was called Finance (no. 2) Bill, as it was the second Finance Bill for that session of Parliament, but it was the first Finance Bill to be published in 2017.
This bill is the second Finance Bill published in 2017 and it will become Finance (no. 2) Act 2017, if it is passed before Christmas. Clear?
To add to the confusion, Mel Stride Financial Secretary to the Treasury has announced that more draft finance bill clauses will be published on 13 September. These clauses will form part of the next Finance (no. 2) Bill 2017-2019, which will be passed as Finance Act 2018. These draft clauses and accompanying notes will be open for consultation until 25 October 2017.
There is no formal consultation period for this Finance Bill 2017-19, as almost all of the current provisions were previously published as part of the first Finance Bill 2017, but stripped out of that bill to permit a slim FA 2017 to be passed before the General Election. The consultation on those provisions was undertaken in the Autumn of 2016.
However, not all the current provisions are rehashed from the pre-election Bill. In Schedule 4, which provides new rules for carried-forward corporate losses, there is a new part 8 that deals with transferred trades where there has been no change of ownership. We will look at this new development in a later article.
Making Tax Digital
I had thought that the law makers would take the sensible approach to Making Tax Digital (MTD), and get the law for MTD for VAT right first, before moving on to MTD for income tax. However, this bill does include enabling provisions for MTD for income tax, with key differences from the provisions which were published on 20 March 2017.
The income tax clauses require an end of period statement to be submitted on or before the time the person (individual or trustee) delivers a personal SA tax return, or if earlier, by 31 January following the tax year. The previous draft provisions required the end of period statement to be delivered before the end of a specified period, in other words at a different time to the SA tax return. It appears that this redraft has eliminated one of the six MTD returns I previously alerted you to, and combines that end of period statement with the SA tax return.
VAT and MTD
The clauses dealing with MTD for VAT have been rewritten from the 20 March 2017 version. The detailed requirements for keeping digital records for VAT will be contained in regulations to be passed by Ministers, possibly with little or no consultation.
However, there is a new exemption from digital record keeping for businesses whose turnover for the previous 12 months is below the VAT registration threshold. A modified exemption will apply where a business has been transferred as a going concern.
The regulations requiring digital record keeping for VAT will not come into effect before 1 April 2019.
The first Finance Bill 2017 was the longest anyone can remember. This second Finance Bill 2017-2019 is the second longest at 674 pages (in PDF form). If it is passed in its current form it will become the second longest Finance Act, beaten only by FA 2012 which has 703 pages.
About Rebecca Cave
Consulting tax editor for Accountingweb.co.uk. I also co-author several annual tax books for Bloomsbury Professional and write newsletters for other publishers.