Accountants believe that plans by the Conservative Party for tougher rules against tax avoidance and tax evasion will get through parliament, despite its slim majority based on a coalition with the Democratic Unionist Party of Northern Ireland.
As Accounting WEB reported in April, the largest Finance Bill in history was shrunk because of the June general election.
Dropped clauses in the Finance Bill included parts of Making Tax Digital, some tax rules for “non doms” and restrictions on corporation tax losses.
But tax experts expect that the government will stick to manifesto plans for tougher measures against illegal avoidance/evasion, including penalties for tax advisers who enable schemes that are judged to be illegal.
John Cassidy, partner at Crowe Clark Whitehill, said: “In the current climate I do not think that any measures designed to make more money for the Treasury by combatting perceived avoidance or manipulation of the tax system, or to make it easier for HMRC to collect it, will have any real opposition at all. [That] said most things in the Finance Bill that got scrapped because of the election will get enacted.”
John Cullinane, tax policy director at the Chartered Institute of Taxation, said that although the tax profession was initially worried that HMRC’s planned powers to fine tax advisers involved in an illegal scheme were too broad, and could stop people getting honest and impartial financial advice, the government had made some concessions.
“It has been scaled back but [the legislation] is still unusual round the world. Advisers could be targeted for advising. Or could company formation agents be fined [if the company is involved in illegal tax avoidance]?”
Support among the main political parties for tougher anti-avoidance laws will make it hard for any opposition party to vote against new powers for HMRC to tackle avoidance.
Making Tax Digital
There isn’t the same consensus about the government’s plans to digitise the tax system by 2020.
In its March Budget, the Conservative Party said it would delay the for unincorporated businesses with turnovers under the VAT threshold, but Cullinane believes that other parts of Making Tax Digital (MTD) may also be delayed.
“Every single [UK political] party, including the DUP, has expressed concern about the pace and level of mandation in MTD,” he said.