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What to expect from the Summer Finance Bill

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26th Jun 2017
Journalist
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With this year’s first Finance Bill blown apart by pre-election purdah, its summer successor is expected to provide long-awaited details on a wide variety of proposals, including non-doms and Making Tax Digital.

While tax advisers and taxpayers alike have had precious little policy detail to chew on in recent months, last week’s Queen’s Speech heralded three Finance Bills over the course of the next two years to provide the legislative backbone to Budget decisions.

First up will be the Summer Finance Bill, which is expected to sweep up the majority of measures cut in the pre-election wash-up caused by Theresa May’s failed election power play.

To the frustration of many, the Queen’s Speech was light on the specific measures the government intends to implement and the timescale on which they hope to do so. The background notes accompanying the speech state that the Summer Finance Bill 2017 will include “a range of tax measures including those to tackle avoidance,” but provided little else.

No date has been set for the Bill, but Parliament’s summer recess begins 20 July so it is likely to be sooner rather than later to allow adequate time to consider its contents.

John Cullinane, the Chartered Institute of Taxation’s tax policy director, was one of many industry commentators to ask for more detail around the Bill, calling for an urgent statement to “clarify the government’s intention on the proposals dropped from the pre-election Finance Bill”.

However, with no such statement forthcoming (at time of writing) what sorts of measures can we expect to see, and how much will remain from its predecessor?

Making Tax Digital

Having the legislation meant to underpin it dropped from the Finance Bill was just the latest setback to befall the government’s digital taxation project, which has been hampered by issues as diverse as the Panama Papers, the Brexit vote and a general election.

While a pilot project ticks along in the background to fine-tune the software requirements, the relative lack of detail around this complex mix of tax law and technology has left accountants, clients and commentators with many unanswered questions.  

Reacting to the Queen’s Speech, RSM’s senior tax partner George Bull was the latest to voice apprehension that the time lost to delays will lead to implementation issues.

“We already know from many recent tribunal decisions that the legislation, and associated HMRC practices, is creaking under the strain of the existing system,” said Bull.

“In the debates on the Queen's speech, we therefore hope that MPs will challenge the ministers responsible for HMRC to explain why they are allowing inaccurate software to be used this year, and what they will do to guarantee that MTD will achieve its tax-raising objectives without imposing impossible and contradictory demands on businesses and individuals.”

While concerns about the project’s schedule have also been expressed in the Lords and the Treasury Select Committee, due to the government’s tax-raising objectives and the £1.2bn already committed to the project, many feel Summer Finance Bill 2017 will see MTD continue along on its current timetable.

Regardless of the timings, accountants will be looking to the bill to provide clarity and detail.

Non-doms

The decision to drop the proposed changes from the Finance Bill to the taxation of non-domiciled individuals in the pre-election wash-up surprised commentators for three main reasons, according to RSM’s George Bull.

Firstly, because the decision to withdraw the legislation, made on 24 April came after the date it was due to take effect – 6 April 2017.

Secondly, due to the above many non-doms had already taken action based on the draft legislation, by selling assets relying on a rebasing relief, and by bringing funds to the UK relying on a cleansing relief. Both reliefs have currently been withdrawn, potentially creating large tax bills for the people who relied on them.

And finally, because the legislation had been subject to a careful and extensive consultation.

While it may seem a simple matter for the government to reinstate the draft legislation in full with a commencement date of 6 April 2017, providing certainty to those who prepared for the introduction of this new legislation, a newly emboldened Labour Party may wish to reopen the debate on the legislation, potentially make it even tougher than it already is on non-doms.

National Insurance

For historical reasons, National Insurance changes are not included in the Finance Bill, and instead are subject to separate parliamentary procedures. Therefore a National Insurance Contributions Bill will arrive later this year, which is expected to legislate for NIC changes announced in Budget 2016 and Autumn Statement 2016

These changes are very likely to relate to the abolition of class 2 NIC and to ‘disguised remuneration’ and not to Philip Hammonds attempted reforms to class 4 NIC for the self-employed, which were abandoned shortly after this year’s Budget.

A separate Customs Bill will also be put forward to ensure that the UK has stand-alone regimes for Customs and VAT after its assumed exit from the European Union.

 

What measures would you like to see from the Summer Bill? Will it be an ‘all eyes on MTD’ affair, or should other priorities take precedence with Brexit looming large over the economic landscape?

Replies (19)

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By johnjenkins
26th Jun 2017 10:14

The Government have to raise a lot of money to pay for increased security, health and safety, brexit, coalition and much more to do with the demise of austerity measures. There is only one place this extra is coming from and that is middle England. I doubt if TM is too bothered how she gets it as she won't be about too long, unless she can make better headway in the brexit negotiations.
I have noticed that some collectors chasing corporation tax have not heard of set off with CIS tax so perhaps more staff are being recruited, but of course, not trained properly.
I believe MTD will go ahead until its destructive conclusion.

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By pauljohnston
26th Jun 2017 10:27

Are you sure that there will be a Summer Finance Bill. As Mr Hammond has said that the budget is going to be in September he may well leave the Summer Finance Bill until then.

John is correct that there is not sufficient money in government coffers. Middle England or should I say much of London and the south will be hit by higher taxation.

This is going to be an ongoing battle until the Government stops spending more than its income or the economy picks up substationally. Neither option I believe will occur for years.

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Replying to pauljohnston:
By Brian Ogilvie
26th Jun 2017 10:46

"As Mr Hammond has said that the budget is going to be in September"

Paul I cannot find this statement - not in Mansion House speech that I can see - can you advise please ?

Thanks

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Replying to pauljohnston:
By Tom Herbert
26th Jun 2017 11:04

@pauljohnston

My understanding is that the legislative programme for this extended two-year session of Parliament will include three finance bills to implement budget decisions.

Following the pattern laid down by Philip Hammond in his first Budget, one of these is likely to be published in autumn 2017 (with legislation coming into force in March/April 2018), and another in autumn 2018, with provisions coming into force in March/April 2019.

The third finance bill promised in the Queen's speech, the Summer Finance Bill 2017, in theory, is meant to sweep up the measures cut from the previous Budget, but similar to a lot of recent events things are far from clear.

We do not have a date or a list of content apart from the generic statement about avoidance measures.

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Replying to TomHerbert:
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By espionage
28th Jun 2017 16:03

I too heard Hammond say that the next Budget will be in the autumn. I think it was either on the Andrew Marr Show or on the Today programme.

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By AndrewV12
26th Jun 2017 11:16

'To the frustration of many, the Queen’s Speech was light on the specific measures the government intends to implement and the timescale on which they hope to do so'

We are seeing more and more of this, the budget is just a hours or so's rabbit about nothing, whilst financial policies are implemented on the darkest, wettest windiest nights, when everyone merrily doing something else only to wake up and hear all about it on the radio.

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By SpreadsheetUser
26th Jun 2017 12:06

I don't see how anyone can expect MTD to start in April 2018 with no details until Autumn

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Replying to SpreadsheetUser:
By Nick Graves
26th Jun 2017 12:53

SpreadsheetUser wrote:

I don't see how anyone can expect MTD to start in April 2018 with no details until Autumn

Logic might dictate that.

Doesn't mean it won't happen, though!

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Replying to Nick Graves:
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By SpreadsheetUser
26th Jun 2017 21:46

Yeah, what WAS I thinking? HMRC and logic?!

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Chris M
By mr. mischief
26th Jun 2017 16:17

I never thought I would say this, but I think I will write to the DUP about MTD.

I operate in Cumbria. The issues we face which make MTD harder than the national average are:

1. Poor and in some cases no broadband at all.

2. A higher propertion of smaller businesses which are exactly the clients who will see the most adverse impact and the highest fee increases.

My guess is that both of the above features apply to the constituents of the DUP members. If the Tories are just going to roll over on MTD, maybe we can get the DUP to vote it down.

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Replying to mr. mischief:
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By johnjenkins
26th Jun 2017 16:57

Too late, they got most of the dosh they wanted.

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Replying to johnjenkins:
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By nicmgfi
27th Jun 2017 12:54

£1 bn was already ear marked for NI development, even so, it is still less than Gordon Brown gave the DUP for supporting him in ONE vote (£1.4 bn)

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Replying to nicmgfi:
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By johnjenkins
27th Jun 2017 13:18

I thought that the £1 bn was new money and £500K was earmarked for NI. Still cheaper than having the SNP on board.

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Replying to johnjenkins:
paddle steamer
By DJKL
27th Jun 2017 21:15

I though £1bn was merely the downpayment.

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Replying to DJKL:
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By johnjenkins
28th Jun 2017 08:53

Yep, looks like the DUP have won the contract to make Romanian cells bigger.

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Chris M
By mr. mischief
26th Jun 2017 20:56

Anyone who thinks the DUP has gone away and will sit quietly waving through Government legislation for the next 5 years knows nothing at all about the DUP.

You'd almost prefer being in a supply and confidence arrangement with Sinn Fein if they agreed to just turn up for the votes then go back to Ireland again.

If Theresa May gets through 5 months without a significant backtrack in the face of DUP threats to hold a vote of confidence or similar, she can consider that a job well done.

As the DUP has proved in hoovering up all the Proddy votes, when it smells blood in the water it does not mess about. And May is a dead woman walking.

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Replying to mr. mischief:
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By johnjenkins
27th Jun 2017 08:30

What would the people of Northern Ireland feel if they had to have another election caused by DUP not getting what they want?
I think TM has b(r)ought stability for the next two years, after that it's anybody's guess.

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Replying to mr. mischief:
By jon_griffey
27th Jun 2017 10:46

I would have thought that the spectre of a reunification referendum from a Corbyn Government would keep the DUP in line.

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Replying to jon_griffey:
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By johnjenkins
27th Jun 2017 11:39

Although JC did better than expected he's a long way off becoming PM. The Tories won't rock the boat for the next two years, though sometimes good comes from destruction.
It wouldn't surprise me if there is no trade deal with the EU and they start forming a Federal Europe, which really is what they want all along. Now with Macron on board (he didn't start a new political party for nothing) the way is clear. I see Napcron taking over the EU.

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