Legislation Day 2022 - What you need to know

Amidst the uncertainties of the resignation of the Chancellor and the Tory Party leadership election the machinery of government continues to function and today we saw the publication of draft clauses for the next Finance Bill. As expected, there are no new policy announcements – those are for whoever will be at the dispatch box in the Autumn - but we did get several consultation responses on the details of previously announced proposals, and some further consultations on points of detail.

Much of what was produced today is highly technical and while the specialists will need to pore over every word there is probably little here which will raise eyebrows. My initial reaction is that there seem to be few major policy U turns and largely the government is carrying on the with the plans which had previously been announced.

?A few things did catch my eye.

The first was the decision not to go ahead with changes to the process under which the self-employed and landlords have to register for self-assessment. Respondents to the consultation suggested that the government’s original proposals merely replaced one set of complications with another, and there is to be a further consultation to align the rules more closely with the forthcoming introduction of making tax digital.

The proposals for tackling international tax debt, on which the government has been consulting, have met with wider support from the tax community and further work is to be done in this important area. On the international front we also saw more details about documentation required to support a business’ transfer pricing position and the new rules for the 15% minimum tax for UK parent companies where subsidiary profits in a non-UK jurisdiction are taxed at below 15%. Not surprisingly the legislation to give effect to this is complex – it runs to 116 pages and the explanatory notes take another 239 pages. It will take a great deal of head scratching before all the nuances of this are fully understood.

Perhaps the measure which will have the greatest practical effect for individual taxpayers is the reform of the capital gains tax rules which apply when couples separate. The existing rules have all sorts of unexpected traps and the proposal to simplify them and give couples longer to sort out their finances after separation will be widely welcomed.

Finally, it is worth noting the changes to the way in which Research and Development claims are to be made. This has been an area of real concern recently, with evidence that many highly spurious claims are being made. Even though the new requirements will be more onerous, including the requirement to notify HMRC of the intention to make a claim, they will be welcomed by most in the industry if they have the desired effect of stamping out abusive claims.

As ever the so-called ‘legislation day’ doesn’t bring major surprises. That’s not its purpose. It is all part of the continuing fiscal cycle designed to ensure the proposals get as much scrutiny as possible before they become law. That doesn’t always work out as it should, but there is no doubt that this process of publishing draft legislation for comment before it is enacted has been a positive move. Let’s hope that any new Chancellor doesn’t decide to abandon it.

Our expert writers are already hard at work putting together detailed commentary on all of today’s publications. This will be available tomorrow to Tolley?Library and Tolley?Guidance subscribers in their usual sources.