Hammond let off over 'Dostoevsky-esque' Finance Bill
Philip Hammond has been let off being chancellor at a time when his government has published a Finance Bill that runs for more pages than a novel by Russian heavyweight author Dostoevsky.
Speaking on Friday, the day of the bill’s publication, the Chartered Institute of Taxation (CIOT) said the blame for the second longest Finance Act of all time actually lay with Mr Hammond’s predecessor, George Osborne.
“In defence of the current chancellor, most of the measures…originated before his time at the Treasury,” began the institute, referring to the 674-page act which contains measures the government dropped in April.
“We hope that that will be the pattern going forward and today’s Bill will be the last bow of the Finance Bill longer than a Dostoevsky novel.”
Expected to be enacted by parliament before the Christmas 2017 recess, the bill contains several clauses that will reform contracting or/and impact contractors’ finances, such as:
Making Tax Digital
In explanatory notes to the bill, the government says: “This clause enables the government to make business taxes digital for income tax purposes, as announced at Autumn Statement 2015, from a future date still to be decided.”
A Cutback in the Dividend Allowance
One of several “imbalances” in the tax system that the government says the bill tackles, the reduction in the dividend allowance from £5,000 to £2,000 will go ahead from April.
The government explained: “This [measure] will reduce the tax difference between someone working through a company and an employed or self-employed person”.
A New Charge on Disguised Remuneration
Following consultation last year, a new charge will be introduced on disguised remuneration loans that were made after April 5th 1999 and remain outstanding on April 5th 2019.
“These changes will help to meet the government’s objective of tackling tax avoidance and will ensure that users of disguised remuneration avoidance schemes pay their fair share of tax and National Insurance contributions.”
In the notes to the charge, the government also said that six amendments have been made since the Finance Bill 2017 was first published, but it called them “minor” and claimed they do not reflect a change in policy.
A Widening of Anti-Avoidance rules
New DOTAS rules covering VAT and indirect taxes, including insurance premium tax, that were originally due to come into force from this month will now apply from January 1st 2018.
A Crackdown on Avoidance Enablers
Those who “design, market, or otherwise facilitate” avoidance will face a new penalty for enabling the use of abusive tax avoidance arrangements, which are later defeated.
The bill also contains clauses to tighten the regime for non-UK domiciled individuals and large corporations (‘tax loss relief’ and ‘interest deductibility’). More positively, it gives savers access to £500 from their pension savings for regulated financial advice.
“Despite the pre-election Bill being split in two, the [September 2017] bill… [is] beaten only by the 703-page Finance Act 2012,” said the CIOT.
It added: “While much of the new legislation will only apply to larger businesses this will still represent a further complicating of the tax system, both by lengthening the code and through the process of change. Feedback from taxpayers indicates that the pace of change itself is one of the biggest factors in making the tax system complicated for its users.”