Finance Bill 2017-18 (or Finance Bill (No.2) 2017-19 as it is also referred to in some places) was published today ahead of its second reading debate on December 11th.
The Bill is scheduled for two days of debate in Committee of the Whole House on December 18th and 19th. The remaining clauses are expected to be debated in Public Bill Committee in the new year, with the Bill passing its remaining stages and gaining Royal Assent before the end of March.
The Bill is 192 pages long - relatively brief after a succession of 600+ page Finance Bills. Excluding Finance Bills split in two because of a general election this is the shortest FB since George Osborne's first in 2010, and before that Gordon Brown's first in 1997. If the new Bill doesn't grow during its passage, and if the Government stick to their intention of not introducing another for 12 months, then 2018 will be the lightest year for Finance Bill legislation since 1992 (two Acts totalling 190 pages) and before that 1983 (two Acts - less than 100 pages between them). Perhaps they are heeding our Better Budgets call to 'do less and do it better'?
The Bill includes eight measures consulted on in draft, of which CIOT commented on three:
Offshore trusts: anti-avoidance – we argued changes were needed to ensure the provisions operate coherently and without unintended consequences
Termination payments: removal of foreign service relief (FSR) - we expressed concern (amongst other things) that the net result of removing FSR without replacing it will be that a termination award made to an individual that has largely worked overseas but ends his/her employment in the UK will be taxed more heavily than a ‘normal’ bonus
Tackling disguised remuneration - avoidance schemes – we expressed concern that the new ‘close company gateway’ remains too widely drafted, such that it potentially applies to ordinary commercial transactions and other transactions that are not employment income tax avoidance
The Bill also includes a range of measures announced in the November Budget. These include:
- Changes to Venture Capital Trusts and the Enterprise Investment Scheme
- Technical amendments (tidying up) to provisions on corporate interest restriction passed in Finance Act (No.2) 2017
- Freezing of the Corporate Capital Gains indexation allowance
- Extension of joint and several liability (JSL) on online marketplaces
- Landfill tax reforms
- Stamp Duty Land Tax relief for first-time buyers
- Giving effect to the Base Erosion and Profit Shifting (BEPS) Multilateral Instrument
As usual the CIOT, LITRG and the ATT will be providing briefing material to MPs and peers debating the Bill, including through submissions to the Public Bill Committee. These will appear on the Public Bill Committee webpages and on the relevant sections of the CIOT, LITRG and ATT websites.
The December-March parliamentary passage for the Finance Bill is the ‘new normal’ following changes to the Budget process. As recommended by CIOT, the Institute for Government and the Institute for Fiscal Studies in our Better Budgets report the Government has decided to hold just a single ‘fiscal event’ (that is, Budget or Autumn Statement) annually. At the same time the Government has decided to hold this event (the Budget) in November rather than March. One upside of this is that the post-Budget Finance Bill should be able to be passed before the start of the new financial year, meaning less legislation going through parliamentary scrutiny (and potentially amendment) after it has theoretically come into effect.
Under the new timetable we understand consultations from the November Budget will generally be launched in January with the aim of finishing them before Easter. ‘L-Day’, when draft clauses are published for the next Finance Bill, is expected to be in July going forward.
At the end of the four days of debate MPs voted on the 44 Budget Resolutions. All were approved. Only one (number 28, on the bank levy) was pressed to the vote and it was passed 316-293. The resolutions are listed here.
The opposition are unhappy that they will be restricted even more than usual in terms of tabling amendments to the Bill. At Business Questions yesterday, Valerie Vaz, Shadow Leader of the House, raised the failure of the Government to table a general ‘amendment to the law’ resolution for the Finance Bill. “There have been only five occasions when that has not happened at such a time. In 1929, it happened immediately before a general election. On the other occasions, in 1974, 1997, 2010 and July 2017, it happened immediately after a general election. “Erskine May” points out that: “On occasions, and in particular when it has been necessary to proceed rapidly with a Finance Bill in anticipation of a dissolution of Parliament, the ‘Amendment of the law’ resolution has been omitted.” Will the Leader of the House update us on the Government’s thinking on why there is not a chance for the Opposition parties to put forward our alternative case?” Andrea Leadsom, Leader of the House of Commons, replied: “The hon. Lady made a point about the Opposition’s ability to put forward an alternative case on the Finance Bill. I will write to her on that point, if I may, because I am actually looking into the matter at the moment.”
CIOT Head of External Relations