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Spring Statement 2018: Move to ‘grown-up’ tax policy garners mixed reaction

13th Mar 2018
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While the Chancellor’s new Spring Statement contained no explosions, the documents released in the aftermath of the speech signalled the slow simmer of tax evolution promised when Philip Hammond first arrived at 11 Downing Street.

To see the list of consultations and calls for evidence click here or scroll down the page.

Hammond made a show of listening to the tax and accountancy bodies when he ascended to the office of Chancellor, and the move to limit new tax announcements to just one annual fiscal event – the autumn Budget – was intended as a further step towards a more ‘grown-up’ approach.

In a Spring Statement speech that was light on details, and at points resembled a party political broadcast, the Chancellor stated that the move to a single autumn Budget would allow more time for stakeholder and parliamentary engagement on potential fiscal changes.

Spring Statement ‘a good start’

The Chartered Institute of Taxation’s John Cullinane welcomed the Spring Statement as “a significant step” towards more considered and effective tax policy-making.

Cullinane praised the lack of “fiddly tax changes” and greeted the launch of a number of broad early stage consultations as something the profession wanted to see.

“Having two major fiscal events a year encouraged government to keep fiddling about with the system,” said Cullinane, “while frequently not allowing enough time to consult on planned changes.”

The shift should enable HMRC and Treasury officials to “get off the treadmill of constant change”, and free up time for better consultation and scrutiny of the proposals already put forward.

“In the past too many consultations have begun when key decisions have already been made, shutting off potential better options to achieve the same goal,” continued Cullinane. “Calls for evidence, like those launched today on the VAT threshold … are hopeful early signs that the government will be doing more early consultation, getting input from business, tax professionals and others to inform the process before a proposal has been drawn up.

“Nobody thinks the tax system is perfect, or that it doesn’t need reform. But we need considered, carefully consulted on change, enacted with good warning and in line with a coherent and widely understood ongoing strategy. Acting less fitfully, but more effectively, should be the government’s approach. Today’s limited statement is a good start.”

Spring Statement a ‘missed opportunity’

However, the ACCA’s head of tax Chas Roy-Chowdhury labelled the statement a “missed opportunity” to set out some bold economic policies in uncertain times.

“It was disappointing that Philip Hammond missed the opportunity to bring forward increases in the personal allowance and basic rate band, to pass on savings to stretched taxpayers.”

Roy-Chowdhury also warned that the government should exercise “careful judgment” when it comes to potential tax changes on digital businesses.

“Measures aimed at tackling perceived tax avoidance by the Big Tech firms could easily impact on much smaller digital firms’ competitiveness and investment,” he said. “Any effective digital taxation system must be built on a multilateral framework and align with the latest OECD work on the digital economy.”

Consultations/calls for evidence published in the aftermath of the Spring Statement speech (correct at time of writing).

Replies (4)

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By Silver Birch Accts
14th Mar 2018 13:00

Crikey, just read through Alternative Method of VAT collection, lots of nice colorful diagrams but otherwise explaining Real Time for VAT with an Annual VAT Return and much else. Is this from the OTC (Office of Tax Complication)
Why not revert to Purchase Tax.

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By johnjenkins
14th Mar 2018 13:01

By consultation read "we haven't got a clue what to do".
His windfall was probably helped quite considerably by the dividend tax. So he had a bit to play with.
I'm not convinced he actually knows what he should do.
Is there a case for there to be no threshold on VAT? So that all business have to register and do a quarterly return. Much fairer than the cliffhanger approach we've got now. According to MTD all business will have to do quarterly figures anyway.
Talking and doing are two different things.

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By Char
14th Mar 2018 14:29

The current's government use of consultations is generally to either:-
1. delay a decision being made or indeed,
2. look like they are listening (when they are not).

We only need to look at the tenant's fees, building regulations, MTD or any of the consultations in process or completed, and we can see the barely any real change or advice being taken by the government.

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By Casterbridge Hardy LLP
14th Mar 2018 16:47

Smoke and mirrors again.

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