Tuesday, 17 August 2010 12:00 AM
This has been a good start from a Government who seem willing to listen to the concerns and suggestions of the tax profession.
Delivering the first Budget of a new government, it was good to see the Chancellor willing to set out frameworks and 'road maps', such as with the five year plan on the reform of corporation tax. These frameworks should - provided they are stuck to! - give us more certainty and clarity over the way that rates and allowances will move in the medium term, enabling business and individual taxpayers to plan ahead more confidently.
The Government's decision to split the Finance Bill in two and enable more consultation on its technical aspects was also welcome.In general, the CIOT has been encouraged by the way tax changes are being introduced by the new administration. For example, delaying the VAT increase until the new year should give businesses time to prepare and get their pricing right. Clearly lessons have been learned from the problems caused by the immediate VAT cut of 2008.
Delaying the cuts in capital allowances will give time for businesses to adjust investment plans. On CGT, setting the higher rate at 28% pragmatically avoids the need to bring in complex tapering or indexation allowances; we would have preferred the change to come in from the start of the next tax year, but can understand the drive for immediate action.
The review of the changes to pensions tax relief is very sensible. We all understand this is to be curtailed, but there must be a better way than the complicated system pushed through before the election - for example a simple cut in the annual contribution limit.
With tax law reform one of the CIOT's priorities, the key document is surely that on the new approach to Tax Policy Making. Our tax law process is deeply flawed and the paper's proposals are very positive.
Setting up of the Office of Tax Simplification is a particularly welcome move. The CIOT has long called for simplification of the UK's tax rules, and argued that a new body needs to be set up to review our existing stock of tax laws and their effectiveness. We are delighted that the Government has listened to these calls, and that they have appointed John Whiting, who also serves as the CIOT's Tax Policy Director, as the Tax Director of the new body.
While the OTS is welcome, there is also a pressing need for improvements in the parliamentary process for scrutinising new and existing tax laws. The CIOT will be continuing to press for improvements in this area, including the setting up of a Joint Committee on Taxation which could take advantage of the expertise of members of both Houses of Parliament to improve the quality of our tax laws.
In a nutshell - a good start, a challenging pace, but much to deliver on.