The acceleration of the Finance Bill - more uncertainty for Business, not less
26 April 2017
The Finance Bill often passes with relatively little fanfare. It's when new tax measures often announced in a Budget become law. The legislation has usually been in draft form for a good few months, and niggles hopefully ironed out.
But while the Bill is typically passed in July, the Government has accelerated things - as is usually the case before a General Election. The Bill will receive Royal Assent on Thursday.
So as not to rush legislation through without due care and scrutiny, many measures have been left out. This is good news and bad news.
On the plus side, there's more time to ensure the legislation is effective. On the downside, people and businesses won't be sure if the measures left out will ever come into force.
Take the Substantial Shareholding Exemption rules. These exempt the disposal of certain shares in subsidiaries from corporation tax on any capital gain. The rules theoretically came into effect on 1 April, so a business making a relevant disposal after that date would have thought they'd benefit from the exemption. Now they can no longer be sure.
While the key driver of the uncertainty is the impending Election, even if the same Government remains in power, there's more likelihood that the rules will evolve given the time lag. It will be important the Government post 8th June sets out its stall quickly on the measures held in limbo - both in terms of scope and timing.
Businesses loathe uncertainty (especially in already uncertain times) but it would definitely be worse if poor legislation was rushed through. Taxpayers could end up unable to apply the rules, or could even find themselves the wrong side of the law. UK tax code needs a good spring clean - less is definitely more at present. Let's use the time wisely to get rules that work and not create a period of wasted hiatus.