Finance (No 2) Bill 2017-19

The Bill has now completed its main, detailed, House of Commons stages.

The Finance Bill was published on 1 December 2017 and you can access the latest version of the Bill, plus all the related documentation, on the Parliamentary website by clicking here. This includes copies of the Tax Faculty representations discussed below.

You can read the Public Bill Committee debates on the Finance Bill, which took place in January 2018, and which were completed on 16 January 2018, by clicking here.

Tax Faculty submitted six briefings to MPs on various provisions in the Bill and these are on the ICAEW and Tax Faculty Representation pages, as well as on the Parliamentary website. We provide below a brief overview of each paper and a link to the detailed submission. Those submissions were mentioned on three separate occasions in the first and fifth Public Bill Committee Hearings and Anneliese Dodd (Labour) said in relation to the non dom changes:

“ the submission to the Committee by the Institute of Chartered Accountants maintains that the Government’s promises are essentially greater than what they are delivering, even within their own terms. It maintains that the Government’s indication that the inadvertent remittance trap has been closed is not, in practice, fulfilled by these measures, and that such a trap could be continued”.

The other mentions related to diesel cars and VAT and online market places.

The detailed Tax Faculty Representations

Termination payments – foreign service – clause 10

The termination payments regime has been changed and there is now a change to the foreign service exemption which make the new regime more complex. We recommended the new regime should be deferred a year until April 2019 to give business time to prepare and for the tax and NIC changes to start at the same time. See ICAEW Representation 142/17.

Disguised remuneration – Employment and trading income provided through third parties – clauses 11 - 12 and Schedules 1 - 2

In ICAEW Representation 143/17 we recommended that the close company gateway should be dropped, there should be a more effective reasonable excuse protection from penalties on the loan charge provision re information obligations and the proposal to transfer the employer PAYE liability to the employee in certain circumstances should be reconsidered.

Partnerships – clause 18 and Schedule 6

In ICAEW Representation 3/18 we pointed out deficiencies in the proposals if there was a dispute about profit allocations which could happen when partners are themselves in dispute. A partner putting in the partnership return could “load” all the profit onto the other partner with whom he is in dispute and at the moment the proposed law provides inadequate provision to dispute the allocation.

Hybrid and other mismatches – clause 23 and Schedule 7

In ICAEW Representation 141/17 we recommended a technical change to the existing provisions to avoid what would amount to a double charge to tax.

Settlements – anti avoidance – clause 35 and Schedule 10

There are changes to the CGT settlements anti-avoidance legislation and income tax changes to the settlement’s regime and the transfer of assets abroad regime. Our lengthy briefing of 22 pages ICAEW Representation 137/17 spelt out where the legislation does not accord with the government’s policy intentions, or is insufficiently clear. We also sought  clarification as to how some parts of the legislation are intended to work. Some changes to the Bill were announced before Christmas but they were not substantial and have little impact on the concerns expressed in our paper.

VAT Online market places – clause 38

In our ICAEW Representation 145/17 we argue that the UK proposals would be difficult to implement and we believe the currently proposed medium term EU solution would be preferable. The UK should either seek to introduce the latter early or introduce a  UK version of the provision when we have left the EU in 2019.