Mr Hammond had other things on his mind, and clearly had to rewrite much of his speech at the last minute after the failure of the Brexit vote last night. Until the Brexit issue is resolved, the chancellor cannot really take a strategic look at the country’s long-term financial position and we did get a hint that there could be another statement before the summer break. Perhaps we may get some concrete tax proposals at that stage.
But as ever the small print comes to the rescue. Several tax-related documents were published today and we are promised a number of documents in the next few months. The biggest surprise, which was almost hidden away, is the announcement that 'the government will not be mandating making tax digital for any new taxes or business in 2020'. We had expected that MTD for income tax to start in 2020. I may be reading too much into this, but it does now looks as if there has been a change of heart and HMRC accepts that MTD for income tax Is best introduced on a voluntary basis, at least until the robustness of the system has been thoroughly tested. No doubt we will see more detail of this in the coming weeks and months.
The other notable publication today was the report on tax avoidance. Much of this was simply listing the steps that HMRC has taken in recent years to tackle avoidance, but it also includes a number of reports on the effectiveness of some specific avoidance measures. However, anybody expecting these to reveal huge amounts of detail will be severely disappointed. Most of them simply say: 'It has not been possible to estimate the efficacy of this provision in reducing the tax gap'. This is simply because most of these measures have only just come into effect and there is not yet any real information about how they are working. There is a lesson here for those who are anxious to test the effectiveness of legislation about timing: there is a long time lag between it coming into force and the time when HMRC actually receives tax returns which might reflect that new legislation. The much awaited review of the effectiveness of the loan charge has not yet been published; that is still due to be issued by 30 March.
What about the future? There is a long list of topics where we can expect future consultations. The ones which caught my eye included a review of the effectiveness of the GAAR (the general anti-abuse rule); possible simplification of the VAT capital goods scheme; the principal private residence relief; and the social investment tax relief.
This will not go down as a major event in the history of taxation – but then it was never designed for that purpose. In any event, Brexit has completely overshadowed the speech. Mr Hammond was passionate (not a word I would associate with him) about the need to get an agreement and avoid what he portrayed as the nightmare of a no-deal Brexit. Perhaps I am getting cynical in my old age, but at times I really did think that he was launching his leadership bid!
Home >Articles > Initial thoughts on the Spring Statement
Initial thoughts on the Spring Statement
Mr Hammond had other things on his mind, and clearly had to rewrite much of his speech at the last minute after the failure of the Brexit vote last night. Until the Brexit issue is resolved, the chancellor cannot really take a strategic look at the country’s long-term financial position and we did get a hint that there could be another statement before the summer break. Perhaps we may get some concrete tax proposals at that stage.
But as ever the small print comes to the rescue. Several tax-related documents were published today and we are promised a number of documents in the next few months. The biggest surprise, which was almost hidden away, is the announcement that 'the government will not be mandating making tax digital for any new taxes or business in 2020'. We had expected that MTD for income tax to start in 2020. I may be reading too much into this, but it does now looks as if there has been a change of heart and HMRC accepts that MTD for income tax Is best introduced on a voluntary basis, at least until the robustness of the system has been thoroughly tested. No doubt we will see more detail of this in the coming weeks and months.
The other notable publication today was the report on tax avoidance. Much of this was simply listing the steps that HMRC has taken in recent years to tackle avoidance, but it also includes a number of reports on the effectiveness of some specific avoidance measures. However, anybody expecting these to reveal huge amounts of detail will be severely disappointed. Most of them simply say: 'It has not been possible to estimate the efficacy of this provision in reducing the tax gap'. This is simply because most of these measures have only just come into effect and there is not yet any real information about how they are working. There is a lesson here for those who are anxious to test the effectiveness of legislation about timing: there is a long time lag between it coming into force and the time when HMRC actually receives tax returns which might reflect that new legislation. The much awaited review of the effectiveness of the loan charge has not yet been published; that is still due to be issued by 30 March.
What about the future? There is a long list of topics where we can expect future consultations. The ones which caught my eye included a review of the effectiveness of the GAAR (the general anti-abuse rule); possible simplification of the VAT capital goods scheme; the principal private residence relief; and the social investment tax relief.
This will not go down as a major event in the history of taxation – but then it was never designed for that purpose. In any event, Brexit has completely overshadowed the speech. Mr Hammond was passionate (not a word I would associate with him) about the need to get an agreement and avoid what he portrayed as the nightmare of a no-deal Brexit. Perhaps I am getting cynical in my old age, but at times I really did think that he was launching his leadership bid!
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