Taxation logo taxation mission text

Since 1927 the leading authority on tax law, practice and administration

Finance Bill 'increases tax complexity'

27 March 2008
Categories: News , Capital Gains , Companies , Residence & domicile
ACCA calls for simplification of UK system

The annual Finance Bill has been accused of exacerbating the complexity of the UK tax system.

The latest document — published today — is around 440 pages in total, divided into 113 sections, with almost 1,150 pages of explanatory notes by the Treasury  — and the AACA has criticised it for its 'sheer volume and intricacies'.

The organistation's head of taxation, Chas Roy-Chowdhury, complained that the bill becomes more complex with every year, increasing the volume of tax policy.

He added: 'The devil is truly in the detail when it comes to trawling through this bill, and the fundamental elements of a good tax system — fairness and clarity — are often too hard to track down simply because of the bill's bulk.'

Mr Roy-Chowdhury went to call for a simplification of the British tax system.

'[It] is desperately needed, he said. 'An independent tax policy committee, modelled on the Bank of England's Monetary Policy Committee, would help to remove complexity.

'Such a body would make for an efficient UK tax system: one which is stable, certain, simple and fair.'

The Finance Bill legitimises a number of business and personal taxation issues, which were highlighted in the Budget on 12 March. They include:

  • Capital gains tax: The main aspect is the withdrawal of indexation and taper relief for business. The ACCA said it believed that the new rules will have an adverse effect on economic activity by encouraging 'short-termism'.
  • Corporation tax: The impact of changes, said the association, will be felt unfairly by small business because the rate will rise for them, while decreasing for big business.
  • Non-domiciled: The ACCA remarked that while a £30,000 one-off charge on the non-domiciled meets the needs of tax clarity, it sends the wrong signal to international entrepreneurs who want to do business in the UK.
  • ISAs: It is welcoming to see the cash ISA limit increased from £3,000 to £3,600 from 6 April 2008, said ACCA, but the incentive to save is not credible as the overall ISA limit is raised by only £200.
  • Fuel duty: Postponing the 2p fuel tax to October 2008 is 'merely postponing the pain', claimed the association.

Despite the ACCA's many concerns, Chas Roy-Chowdhury concluded on an optimistic note regarding Gift Aid.

'There is confirmation buried in Schedule 19 of the Bill about the issue... which could have fallen victim to the cut in the basic rate of income tax,' he said.

'But the Government has confirmed in the Bill that charities will be protected for the next three years, ensuring that for every £1 given to them using Gift Aid, they will receive 1.28p, rather than £1.25 if they had gone ahead.'

back to top icon