Finance Bill rehashed

full english breakfast
istock_john_shepherd_aw
Rebecca Cave
Tax Writer
Taxwriter Ltd
Columnist
Share this content

Finance (no. 2) Bill 2017 will be published on 8 September. We expect it to contain most, but not all of the provisions which were dropped from the first Finance Bill 2017 in April.

Publication

A written statement to House of Commons from the finance secretary to the Treasury Mel Stride, says the Finance Bill will be published on Friday, but we don’t know exactly when; the Bill could appear online late in the afternoon.

The announcement also says the explanatory notes to the Bill will be placed in the House of Commons and House of Lords libraries on 12 September. So we may have to wait until Monday to read the plain English translation of the proposed law.

What to expect   

We know the new Finance Bill will contain draft provisions relating to at least 48 different areas of tax and benefits which are listed in this note on Finance Bill resolutions. Many of those provisions have been rehashed from the first Finance Bill 2017, which was a record 776 pages long when it was published in March 2017.

However, to get agreement across all political parties, drastic cuts had to be made to allow a much shorter Finance Act 2017 (155 pages) to be passed by Parliament on 27 April 2017 in advance of the general election.  

When will it pass?

The government will want to pass this Finance Bill as quickly as possible, certainly before the next Budget, which is due to be held sometime in November.

However, the date of Royal Assent (the day the Bill becomes an Act), is largely irrelevant as at least 34 provisions will take effect retrospectively from 1st or 6th April 2017, or from a date even earlier, as was originally planned.

Those retrospective provisions will include:  

  • Cash basis for landlords
  • Property income allowance of £1,000
  • Trading income allowance of £1,000
  • Deemed domicile regime for non-doms
  • MPAA restricting pension contributions to £4,000
  • Carry forward of corporate losses
  • Changes to EIS, SEIS and VCT
  • Tax relief for pensions advice for employees

What’s not there?

Like the Macavity the mystery cat, the legislation for Making Tax Digital is unlikely to be found in Finance (no. 2) Bill 2017.

The first Bill included a significant amount of draft law for MTD for business, but only in respect of income tax reporting. As MTD for income tax is now timetabled to start sometime in 2020, it would be putting the cart before the horse to pass the income tax law for MTD before the VAT provisions are hammered out.

MTD for VAT reporting has a proposed commencement date of 1 April 2019, but I have seen no indication that HMRC has thought through exactly how the MTD provisions will apply to the variety of VAT registered businesses from; sole traders, to small and large partnerships, small companies and large multinationals. It’s a big ask to design legislation which will fit all those types of businesses.

I sincerely hope that a comprehensive consultation paper will be issued in advance of the publication of draft legislation for MTD in relation to VAT, but I am not holding my breath.   

Replies

Please login or register to join the discussion.

By Tornado
07th Sep 2017 12:08

"MTD for VAT reporting has a proposed commencement date of 1 April 2019, but I have seen no indication that HMRC has thought through exactly how the MTD provisions will apply to the variety of VAT registered businesses from; sole traders, to small and large partnerships, small companies and large multinationals. It’s a big ask to design legislation which will fit all those types of businesses."

I wrote to Mel Stride a few weeks back suggesting that expecting all VAT registered businesses to be using MTD compliant software to submit VAT Returns from April 2019 was an unrealistic expectation. In addition, trying to introduce this at the same time as we are Brexiting is likely to disrupt VAT revenues as people struggle to understand the new software and Brexit changes at the same time. I suggested that he might not have sufficient funds coming in to pay the Country's bills.

I think this is entirely fair comment.

I received a reply based on the HMRC Glossy Sales Brochure for MTD, but perhaps my message (and many others) got through in the end.

I personally think it is unlikely that the submission of VAT Returns from April 2019 using MTD compliant software will be mandatory. It simply will not happen.

Thanks (1)
avatar
06th Sep 2017 14:28

When I see the letters MTD, the words "Norwegian Blue" spring to mind.

Thanks (1)
to leon0001
06th Sep 2017 14:51

There seem to be an awful lot of Monty Python references on the site today...

Thanks (0)
06th Sep 2017 14:53

Things like the deemed domicile and MPAA changes being introduced retrospectively bother me, since both changes disadvantage taxpayers, and dropping them from the original Finance Bill may have affected planning.

This Government has been lumbering from one PR disaster to another, without potentially outraging even more taxpayers.

Thanks (0)
06th Sep 2017 15:22

I really hope they don't bring in the stupid £1k allowances.

It will be yet another complexity and yet more pressure to do alternative computations and pick the one that benefits the client, and given our previous chancellor has already disappeared from government it matters little if his little toy is chucked away.

On the cash for landlords there are so many holes in that legislation its unbelievable. For example they haven't tackled product fees added to mortgages properly. Tenants deposits barely get a look in. No clue, and of course completely unnecessary now in any case given MTD is dead and buried.

Thanks (1)
avatar
By Eric T
06th Sep 2017 16:27

Seeing as how the creation of these income type specific allowances for interest and dividends has effectively knackered HMRC's computational software, bringing in even more will probably wreck it completely. Let's go for it, I say.

As for the VAT version of MTD, all the talk I've heard seemed to relate to entities that were "over the VAT turnover threshold". What was not clarified was the position of entities that were VAT registered but under the VAT registration threshold.

Would they be forced onto VAT MTD or would they be able to continue using the existing VAT filing system (which is digital anyway)?
In that case, we would have two separate and distinct VAT filing systems in place.

What fun.

Thanks (2)
By Tornado
to Eric T
07th Sep 2017 12:26

I would say that if you are VAT registered, at any turnover, you would be expected to maintain accounting records in MTD compliant software and submit Returns directly from that software. I don't think there will be any other way to submit Returns.

Bear in mind that MTD was being introduced by tax categories, so MTD for VAT is concerned ONLY with the administration of VAT. The idea of joined up thinking disappeared into the blue when some juvenile thought it was best to introduce MTD this way instead of using a more logical business size and type criteria.

This will also possibly make all of the special VAT schemes redundant as most were introduced to 'reduce' the amount of book-keeping that small businesses had to keep but with all VAT registered businesses maintaining perfect records in complex MTD compliant software anyway, there is no need to offer less complex alternatives.

That will make it so much easier for all of us.

Thanks (0)
to Tornado
08th Sep 2017 12:47

Tornado I am more inclined to agree with Eric's view,as in Vat registered businesses with t/o below £85k (typically voluntarily registered or slowing before cessation) will still be able to submit returns using the current system as an alternative to new shiny MTD.

So two seperate systems run in tandem(assuming MTD for VAT actually starts in 2019 and as others have noted here,perhaps it won't)

What a mess.....

Thanks (0)
avatar
08th Sep 2017 20:03

What about businesses over the vat threshold who aren't registered for VAT?

Thanks (0)