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Quick and dirty Budget analysis #2

November 24, 2017

Ten months ago I wrote about using the tools that the government already has – the impact assessment process that results in the TIINs published with tax legislation – in order to achieve a simpler tax system. In particular, why don’t Members of Parliament use the information in TIINs to challenge the inclusion of changes which have no exchequer effect, relive no administrative burden and remove no government costs. At the very least, I argue, such measures ought to be carefully scrutinised to see if the policy objective is a sensible one and is likely to be achieved by the changes suggested.

Here, then, we have the 2017 Budget OOTLAR and some TIINs for tax changes which will bring in no extra money.

Income Tax: encouraging more high-growth investment through Venture Capital Trusts (Page 62 of OOTLAR) This simply updates the regulations controlling how Venture Capital Trusts must invest to retain their tax advantages. Does this need to be legislation? There couldn’t be, I don’t know, a handbook or something?

Taxable benefits and vehicle excise duty: regime for measuring carbon dioxide emissions (Page 87) I’m sorry but this one makes my blood boil. There are rules about carbon dioxide emissions for company cars that govern its treatment for vehicle excise duty and company car tax.  At present you test emissions using something called NEDC. From September this year there’s a new test, something called WLTP. Currently the legislation doesn’t specify which test you use. If this is passed, it will.

I mean, really?

Seriously?

Apparently car makers want “certainty”. Well, why not make cars that produce emissions which are clearly under the threshold whichever way you run the test? This is a ridiculous and unnecessary measure and at the same time a classic example of how the tax system becomes overcomplicated – and why tax simplification is a good thing.

The point isn’t to legislate for the benefit of car manufacturers. The point is to legislate for the citizens of the country, those who will be advantaged by lower carbon emissions from their cars. Sod the certainty – make your cars pass the test whether you test it with one set of initials or another.

Pensions tax registration (page 90) This looks to me like a piece of “gasman cometh” legislation – you know the Flanders and Swann song? Where the gasman comes on a Monday morning and disturbs the skirting boards, the carpenter hammers through a cable…

Here the Pensions Regulator has a “new authorisation and supervision regime for Master Trust pension schemes” and this bit of nil exchequer effect regulation is required to let HMRC have power to refuse registration of pension schemes that don’t meet the new requirements.

This one bears all the signs of having been completed in a tearing hurry five minutes before the Budget paperwork was put to bed, including font changes in the document, and I wonder if the whole measure was put together in five minutes when someone spotted the hole in the web of powers between the two departments.

Of course a better solution might have been to coordinate properly and make the tax relief dependent on the approval of the pensions regulator, and the pensions regulator’s word be final?

Corporation Tax: amendments to the corporate interest restriction rules. (Page 93)  Oh this one is good: “this measure makes technical amendments to the Corporate Interest Restriction (CIR) rules to ensure the regime works as intended.” In other words, someone found a hole in the rules and we need to tinker with the system to plug it? OK, but personally I’d stipulate that in return the person from the Treasury who signed off on it in the first place and their equivalent in HMRC have to go and do routine compliance work till they bring in, what, five million or so?

Corporation Tax: double taxation relief and permanent establishment losses (page 96). More wacky font changes – another last minute decision? And another “reinforces” the policy?

Sigh. I’ll do the other half some other time: this is just too depressing!

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