Tax Credits - protective claims

6 Jul 2017


This is a very large Bill. Much of the legislation has not been the subject of any or sufficient consultation, eg the legislation on employee shares and the wholly new Stamp Duty Land Tax (SDLT). This is very much to be regretted, and is against the Code of Conduct on Consultation. Whilst we can understand that consultation is not easy where anti-avoidance measures are concerned (such as those on share schemes), we have to point out that some 75 pages of complex legislation on this subject are likely to receive little or no scrutiny.


The new powers to require security for VAT where a chain of supply is tainted by evasion are excessive, and may create oppressive burdens on taxpayers who may be unaware of the fraudulent activities of other persons in a particular chain of supply.

Stamp Duty Land Tax

Bearing in mind that electronic conveyancing (one of the drivers of change) is some way off, and that legislation for Special Purpose Vehicles is not included in the Bill, we see no reason to hurry this legislation through without sufficient consultation. In particular, the provisions relating to lease duty, and the absence of sub-sale relief, are unsatisfactory and require a major rethink.

Approved share plans and schemes

We welcome most of these changes, but are concerned that the decision to apply PAYE and NIC to options exercised on or after 9 April 2003 is retrospective in nature and impractical. The impracticalities can only be solved by requiring employees to reimburse their PAYE and NICs, and this too will have its problems. We would like to see the rules changed so that they only apply to options granted on or after 9 April 2003.

Employee securities and options

The new raft of legislation introduced by Schedule 22 is highly complex and suffering from a lack of consultation. We understand that it is necessary to combat NIC and/or PAYE avoidance schemes, but we think this legislation will leave many ‚ genuine‚ share schemes in a mess. We also think that this complicated regime will represent a barrier to wider share ownership in unlisted companies. We are also most concerned that major revisions to ITEPA 2003, which became effective from 6 April 2003, as a result of many years‚ work by the Tax Law Rewrite team, have not been drafted in the Rewrite style. This does cause us to wonder whether the whole Rewrite process is being put in jeopardy.

Corporation tax reform

We welcome the announcement of further consultation on the reform of corporation tax in its broader European and international context. However, we think that the issues arising from recent European Court of Justice (ECJ) cases on the interpretation of the EC Treaty should be considered in a positive spirit, acknowledging that the principles the ECJ is upholding will make for fairness, competitiveness and stability in the long run.

The full text of the representations is attached.

This information has been provided for you by the Technical Department of the CIOT. Please address any queries to Bianca Marsden on tel 020 7235 9381.