CIOT assessment for Treasury Committee: Still too many Budget surprises

The Chartered Institute of Taxation has criticised last week’s Budget for the number of tax measures announced as ‘done deals’ without having been consulted on, and for excessive ‘tinkering’.

The Institute has set out its verdict on the main Budget measures in response to a request from the House of Commons Treasury Committee, in a submission now published on the committee’s website as part of its inquiry into the Budget.

Glyn Fullelove, Chair of the CIOT’s Technical Committee, commented:

“The government has a very good consultation process for tax measures which, when followed, usually results in good, effective legislation. But too often it is being bypassed and we end up with bad law which needs patching up at a later date.

“Philip Hammond’s move to a single fiscal event was a very positive step, which should have freed up time for more and better consultation on tax measures. But last week’s Budget shows that the temptation to launch surprise, sometimes instant, measures on an unsuspecting public is still not being sufficiently resisted.”

In their Budget assessment for the Treasury Committee CIOT state:

“Budget 2018 contains fewer tax changes than in most recent Budgets; perhaps a consequence of its timing and the status of our negotiations on leaving the EU.

“Disappointingly, there continue to be measures being announced as ‘done deals’ or for immediate implementation, with either no or inadequate consultation (for example, the changes to private residence relief and enterprise reliefs such as the Structures and Buildings Allowance (SBA)). This Budget demonstrates on its own terms the detrimental consequences such an approach can have by appearing to correct previous surprise announcements (for example, restricting Employment Allowance or not pursuing the changes to Rent a Room relief).

"A number of measures also have immediate effect. Whilst this is normally understandable when they are for the prevention of avoidance, the SBA is not such a measure, and the fact that it also has not been consulted upon may lead to confusion as to its scope and application.

“There is also a lot of ‘tinkering’… We recognise that some tinkering is necessary to ensure that the measure operates as intended; but would tinkering be necessary if there been adequate consultation and a higher standard of legislative drafting in the first place?”

The CIOT’s analysis includes a ‘traffic light’ assessment of the main Budget measures. The Institute is most positive about the proposals to put voluntary tax returns on a statutory footing, the withdrawal of the shared occupancy test for rent-a-room relief and Universal Credit measures. The most negative reaction is for the capital allowances special rate reduction, the Digital Services Tax and the deferral of reform of HMRC’s penalties regime.
Notes for editors

1. The CIOT submission to the Treasury Committee can be viewed here.

2. The Chartered Institute of Taxation (CIOT)

The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. Through our Low Incomes Tax Reform Group (LITRG), the CIOT has a particular focus on improving the tax system, including tax credits and benefits, for the unrepresented taxpayer.

The CIOT draws on our members’ experience in private practice, commerce and industry, government and academia to improve tax administration and propose and explain how tax policy objectives can most effectively be achieved. We also link to, and draw on, similar leading professional tax bodies in other countries. The CIOT’s comments and recommendations on tax issues are made in line with our charitable objectives: we are politically neutral in our work.

The CIOT’s 18,400 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.
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