Quick and dirty Budget analysis #3

November 24, 2017

If a change to the tax law adds no tax and relieves no costs (to taxpayer or HMRC) then surely you have to ask: why is it happening at all? Here we are back in OOTLAR with the rest of the “nil” exchequer impact TIINs.

Corporation Tax: amendments to the hybrid and other mismatches regime (page 98) is another “gasman cometh” measure. It is “designed to ensure that the regime operates as intended” and again, I have to ask why the legislation (introduced by Sch 10 FA 2016) is already broken. I mean, fix it, OK, but maybe send the people who wrote it back to some other work. There should be consequences.

Ring Fence Corporation Tax: tariff receipts (page 104) seems to be a result of an oil and gas industry shopping list. Although North Sea oil and gas is subject to Ring Fence Corporation Tax at 30% and a Supplementary Charge at 10% there are substantial “incentives” for infrastructure spending and decommissioning. There are, apparently, “activities…which give rise to tariff income” and this no cost/no saving measure will “make it clear” that all tariff receipts qualify for infrastructure incentives.

Again I have to ask, why does this need to be legislated? Why can’t HMRC just “make it clear” by saying, clearly, something like “all tariff receipts qualify for infrastructure incentives?” I’m just saying.

Income Tax: debt traded on a multilateral trading facility (page 107) I have to say I’m suspicious of this one. It excludes a couple of different kinds of corporate debt (the kind of debt traded on a stock exchange) from the requirement to withhold tax on the interest arising. This, apparently, is to “improve the competitiveness” of the UK debt market.

Well OK… but why doesn’t it have any exchequer impact? (I note the exchequer impact, the HMRC impact and, curiously, the equalities impact are in a different font from the remainder of the TIIN, which again to me is strongly suggestive of a last minute panic to write the assessment.) Maybe we’re excusing interest from tax that wouldn’t have arisen in the UK at all if it hadn’t been excused from tax, so there’s – logically – no exchequer impact. But if that’s the case, wouldn’t there then be an economic impact?

This measure is not expected to have any significant macroeconomic impacts.  However there will be a behavioural impact as debt is moved from overseas MTFs to UK MTFs.

I’d like to see some estimate of the size of this economic impact, because if we’re going to make ourselves a tax haven we ought at least to get the peripheral economic benefits, no?

Corporation Tax: capital gains assets transferred to non-resident company: reorganisations of share capital (page 127) This “follows representations from affected business sectors” and, essentially, seems to stop multinationals from incurring tax when they reorganise an overseas branch structure due to an “anomaly” in the way the legislation is written.

I can’t tell whether or not this is a good idea, because it’s said to have “nil” exchequer impact. But the idea of an impact assessment is, surely, to look at the potential consequences of an idea during the development of the measure, and if you were going to develop a piece of legislation to stop companies being “accidentally” taxed, wouldn’t you first establish how big the problem was? In other words, are we relieving a few grand  or a few billion?  If the exchequer impact really is zero, then again, why do we need the legislation at all?

Vehicle Excise Duty: rates for cars, vans, motorcycles and motorcycle trade licences from April 2018 (page 142) This is… this is… well, frankly, this is bullshit. This is an impact assessment for the routine uprating of Vehicle Excise Duty by RPI where the objective is to ensure that motorists “continue to make a fair contribution to the public finances”. And yet its exchequer impact is said to be “nil”!  Are you kidding me? Did the writers of this think that no-one would be bothered to read it? I actually went to the “further advice” section at the end of the TIIN where usually there are details of a policy official one can contact in the case of a technical enquiry.

Here? It’s the general DVLA helpline. The contempt for the process is staggering. Why bother to complete the TIIN at all? Why not simply write “FOAD” instead – it’d be simpler and clearer all round.

Double taxation relief: changes to targeted anti-avoidance rule (page 162) Bog-standard anti-avoidance legislation.

Double taxation: Powers to implement Multilateral Instrument (sic)(page 164) Ah, the Department of Random caPitalisation at work again. Please, writers of the Treasury style guide, pick a rule and stick with it! Otherwise, as for the last one, bog-standard anti-avoidance.

Annual tax on enveloped dwellings: annual chargeable amounts (page 184)  This is another of the “why does this have to be legislation” measures. The annual charge (you don’t even need to know what the charge is for) increases each year since 2013 by inflation (measured by CPI) rounded down to the nearest £50.

Now: if you know what the first year’s charge was, and you have your table telling you what CPI is each year, then you can work this out. It’s not rocket science, it’s scarcely A-level maths. So why does it have to be enshrined in legislation?

Because, according to the TIIN, Section 101(5) of the 2013 Finance Act requires a Treasury Order to be published before each 1st April setting out what the amount is. So because a Treasury Order is a regulation that brings the measure within the bounds of the TIIN system they need to publish a TIIN, but because there’s no change to the amount (which, one assumes, was scored in the original 2013 legislation) it’s a pointless Nil-nil-nil TIIN. So the TIIN is a waste of time. But surely the Treasury Order itself is a waste of time. It’s a clear, plain formula: uprate the previous year’s rounded figures by CPI and round down to the nearest £50. Say it once, do it every year, legislate only if someone starts finding a clever way round it. Stop fussing, stick the figures on a website and just repeal Section 101(5) of the 2013 Finance Act instead.

Here endeth my gallop through the TIINs with the exchequer effect at zero: next – those with “negligible” impact!




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