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The Budget that never was

The annual Budget Statement is usually a big event in the tax world, but 2019 will be the year without a Budget as the government is frozen in a state of Brexit paralysis.

25th Oct 2019
Tax Writer Taxwriter Ltd
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red box budget cancelled

On 14 October, the government announced that the Chancellor of the Exchequer (currently Sajid Javid) would present his Budget Statement to the House of Commons on 6 November.

But that was before the government lost yet another vote in Parliament, this one over the timetabling of the Withdrawal Agreement Bill (WAB) which legislates for Brexit. The WAB must pass through all its stages in Parliament before the UK can ratify the Withdrawal Agreement and leave the EU. This means that Brexit cannot now happen on 31 October as the Prime Minister promised.

“Number 10 sources”, are obviously outraged that their best-laid plans have been thwarted, so alternative strategies are being wheeled out.

Election proposed

On Thursday 24 October, the Prime Minister called for a general election to be held on 12 December. As elections are normally held on a Thursday in the UK, this is the last day an election can be held before the country starts to close down for Christmas. An election on Thursday 19 December would be impractical as village halls, which are used as polling stations, will already be booked for Christmas plays and concerts.

By law, there must be 25 working days (not counting weekends) between the receipt of the writ to call an election and polling day. If polling day is to be 12 December (and that is not certain), Parliament must be dissolved on Thursday 7 November at the very latest.

Now it’s off

The BBC has reported that Parliament will be dissolved for the election campaign on 6 November.

On Friday 25 October, Sajid Javid confirmed on BBC Breakfast: “The Budget is not going ahead because we are planning now to dissolve parliament on the 6th, so clearly you can't have a Budget on the same day.” No alternative date for a Budget Statement was given.

Who decides the date of the election?

The Fixed-Term Parliaments Act 2011, which was passed during the coalition government, requires a general election to be held on the first Thursday of May in every fifth year. For a general election to be held at any other time there must be a vote by two-thirds of MPs (434) in favour of the election, or a no-confidence vote in the Prime Minister.

However, after the no-confidence vote the law requires a period of 14 days in which the MPs try to form an alternative government. If no alternative government can be formed in that period Parliament dissolved for a general election. Taking into account that 14-day waiting period it is now too late to use that route for a general election before Christmas.

This is super-majority of 434 votes in favour of a general election is not guaranteed. MPs are due to vote on the Monday 28 October as to whether to approve a general election. If that election is rejected, Prime Minister Johnson has threatened to freeze the legislative process so that no draft law could proceed through the House of Commons, including the Withdrawal Agreement Bill to legislate for Brexit. The Labour Party has indicated that it could abstain or vote against Johnson’s parliamentary motion to seek an election.   

We live in interesting times.

Replies (13)

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Chris M
By mr. mischief
25th Oct 2019 16:02

That might be 24 hours out of date. In today's policy, the Government wild cat strike has been abandoned once the Ministers realised they did not have a strike pay fund. So the latest from Number 10 - per Tom Newton-Dunn is that all Government business except Brexit is back on.

You can't make this stuff up! The one bloody thing they are supposed to be doing is now the one thing they are planning not to bloody do.

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Replying to mr. mischief:
By Tom Herbert
25th Oct 2019 16:15

I did query this scenario with the Treasury press office this morning before hitting publish. They're adament the Budget is off, regardless of what happens. However, you can't really rule anything out at this stage...

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Replying to TomHerbert:
Chris M
By mr. mischief
25th Oct 2019 19:08

Yes you are right. The intel. I posted was from a press meeting this afternoon. However, it's also true that Cummings has been deliberately mis-briefing things to the press as a way of testing the waters before taking a decision.

So only time will tell. At this stage, if we have a General Election it seems to me that both main parties go into it with massively ambitious spending schemes and no hint of how they are realistically going to pay for them. Nor indeed taking any heed of a likely recession in 2020 or the negative impact of Brexit on government revenues.

This election is shaping up to be deciding whether you believe more in fairies or leprechauns.

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Replying to mr. mischief:
By philaccountant
28th Oct 2019 12:52

£375b was 'found' for QE overnight all those year ago, don't remember that getting much budgetary scrutiny.

Seems if we need to find money for bankers it's there, if it's for the rest of us it's unaffordable.

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By ireallyshouldknowthisbut
25th Oct 2019 17:28

I thought it was a bit odd to have a budget when (a) you don't have a working majority and (b) you expect an election before the legislation could possibly get passed.

Anyhow that's a day and a half I don't have to spend listening to it/writing up about it/telling clients about it.

On the downside I guess we will be back to doing them in March.

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By adamsmith72
25th Oct 2019 22:27

So we won't know what the personal allowance is from next April until this shambles of a parliament sorts itself out? You couldn't write this stuff.

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Replying to adamsmith72:
By whitevanman
25th Oct 2019 23:41

Shame we voters cannot take control of the order paper and tell these useless ****s to get things done and stop pi$$ing about. Oh wait, didn't we do that already..?

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By AndrewV12
28th Oct 2019 11:35

All the contents of the 'Budget' would have been leaked in advance anyway.

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Hallerud at Easter
28th Oct 2019 12:48

The key point in all this is, if my memory is correct, which taxes lapse if not "renewed". The one positive from Brexit could be the H of C remains in purgatory right through past 5th April and we end up not having to pay some taxes.

Can anyone advise which taxes do need annual renewal- is income tax one? (If it is and they can carry on just in to april I expect I could persuade my employer to pay me my entire salary for 2020/2021 in one go just after 5th April)

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Replying to DJKL:
By SteveHa
28th Oct 2019 15:16

Income tax is one you'll be pleased to hear, though I'm not sure that PAYE regs have to be renewed, so deductions would continue, but HMRC would have no right to them.

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Replying to DJKL:
By Dib
29th Oct 2019 13:25

As the Provisional Collection of Taxes Act 1968 applies to income tax, corporation tax, petroleum revenue tax, stamp duty reserve tax, VAT, insurance premium tax, landfill tax and duties of customs and excise I assume none of them can be collected if PCTA1968 conditions are not met.

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Replying to Dib:
By cfield
29th Oct 2019 14:04

When paper corporation tax returns were first banned, you might remember we had all that nonsense from HMRC about not filing CT600s until after the Finance Act received Royal Assent in August. If I remember rightly, income tax was renewed and personal allowances were raised by Statutory Instrument, but they couldn't/wouldn't update corporation tax rates that way. I've still got one client who overpaid CT that year because they taxed him at the old rate. As his company has been dormant ever since then he hasn't had a chance to recover it, so we have to keep carrying it forward in his accounts as a tax debtor. About time we wrote it off I suppose.

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By cfield
28th Oct 2019 15:26

Rebecca, I think you are letting your political colours show. The whole country knows why we're not leaving the EU on 31/10 and it's not Johnson's fault. Would you rather he had broken the law? A law, by the way, that our elected Government didn't pass.

Also, I think comments like "outraged that their best-laid plans have been thwarted" is crossing the line from keeping us up-to-date with the Budget news into political propaganda. When I click on my weekly accountancy bulletin, I don't expect it to look like the front page of the Daily Mirror!

Whilst us subscribers are allowed to say our two-pennorth, it doesn't look right for contributors to nail their colours so brazenly to the mast or it makes it look like the site itself is taking a political position. Whatever side of the debate we're on, we're all entitled to have relevant news presented to us in an impartial and even-handed manner. Mind you, we used to say that about the BBC once!

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