ACCA condemns complexity of UK finance bill
Chas Roy-Chowdhury, ACCA Head of Taxation, said: "In our recent tax manifesto we spelled out to the government two key messages - firstly that businesses need certainty and clarity in tax legislation, and secondly that tax avoidance is legal, by definition. Retrospection (back to March 16) and complex anti-avoidance measures are precisely what business does not need and exactly what this finance bill introduces.
"Large businesses will be particularly hit by the anti-avoidance provisions in this bill - the 'arbitrage' clauses, which seem to propose the UK tax authorities policing multinationals. Companies will now be prevented from receiving 'double-dip' relief in two different jurisdictions if they use so-called 'hybrid' entities or instruments. This will create upheaval among many multinationals and widespread uncertainty as to how these clauses will apply." On pensions, there is more bad news. The lump sum for an individual who agrees to defer taking up his/her state pension by five years will be taxed.
Chas Roy-Chowdhury said: "This is a blow and is not a move that will help with the pensions crisis. Not only will the government gain by not having to pay pensions for those five years but will also now earn tax revenue from these lump sum payments. We had hoped that these lump sums would be tax-exempt but they will be taxable at anything up to 40%."
But ACCA points out one silver lining amidst the clouds. Gift Aid has been extended to increase tax benefits to the individual from charitable giving.
Chas Roy-Chowdhury said: "The one positive contribution of this bill is to widen the Gift Aid provisions, by extending them to buildings, artefacts and gardens amongst others. For instance, being able to get free entrance to these attractions will no longer be taken into account, in the so-called "economic benefit" test, so these activities will not now be excluded from Gift Aid relief."
ACCA believes the length and complexity of today's Bill illustrates why a Tax Policy Committee (TPC) needs to be established. This would operate along the lines of the Monetary Policy Committee (MPC). Government would set the overall economic framework of the tax environment and the TPC would work on adjusting the tax system as appropriate, with a view to long- term simplification.