Following the move to one yearly fiscal event, the Government has set out its approach to tax policy making.
The Chancellor announced at Autumn Statement 2016 that the UK would be moving to a single fiscal event each year – a Budget to be held in the autumn. Following this announcement, the Government has released ‘The new Budget timetable and the tax policy making process’, a policy paper setting out how the move to a single fiscal event will impact tax policy making and the consultation process. The paper notes that the Government’s intention is to ensure that tax changes are announced well in advance of the tax years in which they take effect, which will give more time for the scrutiny of tax legislation and allow the Government to consult with stakeholders at earlier stages of tax policy making.
The document sets out further information on the following areas:
Tax policy making principles
The Government has restated its commitment to the tax policy making principles published in 2010. However, it recognises it can do more and will continue to look for ways to reform and improve the way tax policy is made, including through wider and deeper engagement with business, the tax profession, and wider interest groups.
The Government still intends to develop most tax policies with an announcement at the Budget in autumn, followed by a policy consultation, the publication of draft legislation in July (‘Legislation Day’), and the legislation of the proposals in the next Finance Bill. Early-stage consultations or calls for evidence will be published at the Spring Statement, before measures are announced (or discarded) before the Budget later that year. The document states that the Chancellor “will not make significant tax or spending announcements at the Spring Statement, unless the economic circumstances require it”.
The Chancellor will retain the flexibility to introduce anti-avoidance measures without consultation outside of the normal timetable. Tax announcements related to Brexit could appear outside the normal timetable too with the document stating that “the Government expects to make announcements on EU tax legislation at the point that progress in discussions allows it to do so”.
The Government has also announced plans to consult on most draft secondary legislation going forward.
Passage of the Finance Bill
Finance Bills should reach Royal Assent before the start of the following tax year, to ensure enough time is allowed for Parliamentary scrutiny. Following some recent Finance Bills which have been passed very quickly (albeit due to political constraints), we welcome this commitment to full Parliamentary scrutiny of tax measures.
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