Finance Bill Sub-Committee investigates basis period reform and uncertain tax treatment

16 September 2021

The Finance Bill Sub-committee launches its inquiry into the draft Finance Bill 2021-22 and invites written submissions. The deadline for submissions is 13 October 2021.

Focus of the inquiry

The sub-committee will focus on two areas of the draft Bill:

proposals for income tax basis period reform
notification by large businesses of uncertain tax treatment

Questions

Income tax basis period reform

1. How far does the reform represent a useful simplification?
2. To what extent would the reform deliver a fairer result than the current rules?
3. Would either of the alternative options mentioned in the consultation document be a better solution? If so, why?
4. Are the transitional provisions sufficiently robust? If not, how do they need to change?
5. How onerous is apportionment of profits between tax years likely to be for businesses which do not have an accounting period aligned with the financial/tax year?
6. How manageable is the timetable, especially vis-à-vis the introduction of Making Tax Digital for income tax?
7. What is Her Majesty’s Revenue and Customs doing to support businesses in making the change?
8. How important is reform of the basis period rules in the context of the Government’s 10-year strategy for the tax administration framework?
9. How much of a problem are the existing basis period rules in practice?
10. How does the proposal fit with the work the Office of Tax Simplification is doing on the date of the end of the tax year?

Notification by large businesses of uncertain tax treatment

1. To what extent do the current proposals for notification by large businesses of uncertain tax treatment take account of concerns raised in the two consultations there have been on the measure?
2. Is sufficient support being given to businesses to help them comply with the measure?
The sub-committee is looking to hear from as diverse a range of views as possible – if you think someone you know would have an interest in contributing to the inquiry, please pass this on to them.

Chair’s Quote

Lord Bridges of Headley, Chair of the sub-committee, comments:

“The proposed changes to the basis period will impact individuals, trusts, partnerships and unincorporated entities with trading incomes. It is important that the Government gets these changes right.

“To inform our work we want to hear from as broad a range of people and organisations as possible. If you have a view on any aspect of these proposals, please let us know what you think.”