UK Snap Election Creates Complications For Finance Bill
The United Kingdom’s Prime Minister, Theresa May, caught many off guard by calling a snap general election last week. Added to the weight of uncertainty already bearing down on the UK as a result of Brexit, the timing of this election is hardly ideal, and the announcement demonstrated just how flexible politicians can be with their views, with May having repeatedly rejected the idea of calling an early election to consolidate her and the Conservative Party’s position in power on numerous occasions recently.
But while this development could strengthen May’s hand in the upcoming Brexit negotiations – provided, of course, she gets the comfortable victory pollsters are predicting – it is not, however, going to be very helpful for taxpayers. The 2017 Budget was announced only six weeks ago, and the Government has already performed a u-turn on the most significant proposal, the two percent increase in self-employed social security contributions. Now the Government faces a rush to legislate for the 2017 Finance Bill before parliament dissolves shortly before the June 8 election. And that won’t be easy.
The Chartered Institute of Taxation has pointed out that, under normal circumstances, we could expect two days of debate on the bill in the House of Commons, in addition to 14 to 20 standing committee sessions, and two days of report stage and third reading debate – in other words, plenty of parliamentary scrutiny of the proposed measures. Precedent suggests that, instead, the committee and report stages will be compressed into a single day. And such a truncated timetable, the CIOT warned, would not allow for adequate consideration of the matters it has raised, including areas such as loss relief and interest deductibility.
The CIOT is urging the Government to drop the majority of the current bill and keep only those measures essential to maintain the Government’s revenue-raising capacity, such as renewing the provision of income tax, and other measures that are required urgently, such as anti-avoidance provisions. It said that measures dropped could be reintroduced in a post-election Finance Bill where they can be scrutinized at greater length.
We must wait and see if the Government listens to what seems like a reasonable proposal. And this gives taxpayers in the UK yet another reason to fret.
For more information on this, and other topical international tax matters, please visit: https://www.cchgroup.com/roles/corporations/international-solutions/research/global-tax-weekly-a-closer-look