Spring Budget 2023 and Finance Bill

The Spring Budget was presented by the Chancellor on 15 March 2023. Key announcements included the changes to capital allowances, pensions and the announcement of new investment zones. Extensive Tax Faculty involvement in the Budget included live tweeting, media comments and Insights articles, as well as engagement with HMRC. The Tax Faculty also presented a webinar highlighting the Budget changes on 17 March. Feedback on the webinar was excellent and many thanks to our team of presenters, Anita Monteith, Caroline Miskin, Richard Jones and Mei Lim Cooper. If you missed it, you can watch it using the above link – you will need to be logged in as an ICAEW member to access it. 

On 21 March, the Tax Faculty’s business tax manager Richard Jones spoke about the Budget changes to the All-Party Parliamentary Group on Taxation, focusing on the pension changes and the proposed investment zones. He stressed the need for stability and consistency in the tax system, which was echoed by other speakers. 

The Finance Bill was published on 23 March 2023. At 456 pages, this is the first lengthy Finance Bill for some years. Many of the measures in it were first published in mid-2022, but it has taken until now to have them published in a Finance Bill. We will be submitting comments on key clauses in the Bill as it makes its way through the Parliamentary committee process. If you have any comments, please send them to Lindsey Wicks.

Representational work

We attended various meetings with HMRC covering a diverse range of topics including the trusts and estates team, meetings to discuss various aspects of the tax admin framework review, the ex-pat tax forum and proposed reform of the penalties rules. Members of the Employment Taxes and NIC Committee also met with HMRC on various employment-related matters, including discrepancies and differences between HMRC’s employer liabilities and payments accounts and employers’ records. The Tax Faculty has requested more examples from members to assist HMRC to identify how the discrepancies arise. 

Making Tax Digital

A number of members of the Tax Faculty team attended meetings with HMRC and software developers to discuss aspects of the development of the Making Tax Digital income tax self assessment (MTD ITSA) project. Tax Faculty staff discussed with HMRC’s MTD policy team the case for policy changes that would change the perceptions of businesses and tax agents around the MTD ITSA project, continuing to highlight concerns over quarterly updates and the importance of moving ITSA records to HMRC’s new platform. We also attended the first of a series of ‘co-creation’ meetings to consider the detailed design of MTD for ITSA and suggest how the current proposals might be improved. 

Tax representations

We submitted three representations in the month, as set out below. 

ICAEW REP 17/23 R&D tax reliefs review: consultation on a single scheme. While many members empathised with the government’s focus on mitigating fraud within the R&D tax relief scheme, we are concerned that compliant taxpayers would be penalised because of the poor behaviours of the minority within the R&D regime and that the changes would disproportionately affect the SME scheme.

ICAEW REP 21/23 This representation was submitted in response to faculty members identifying various errors in HMRC’s employer liabilities and payments account.

ICAEW REP 22/23 Calculating holiday entitlement for part year and irregular hours workers – this was a response to a BEIS consultation. Our response emphasised the need for employers to have sufficient lead in time for the changes and that the guidance must make it clear that the changes apply only to Great Britain and not Northern Ireland.

Tax Faculty committee meetings

During the month, there were meetings of the Tax Faculty Board, the Compliance and Investigations Committee, the Employment Taxes and NIC Committee, the Practitioner Tax Committee, the Business Tax Committee and the Tax Policy and Reputation Committee. 

Other consultation forums and meetings

We chaired a further meeting of the pan-professional Professional Conduct in Relation to Taxation (PCRT) group, where the topics discussed included the exposure draft published by the International Ethics Standards Board (IESBA). This inserts new sections on tax planning and related services into IESBA’s existing ethical standard. The deadline for comments is 18 May 2023 and we would welcome comments on it – please send them to Frank Haskew. We also discussed the exposure draft with members of ICAEW’s Ethics Standards Board. 

We met with senior colleagues from CIOT for a working dinner on 13 March 2023. Topics discussed included the continued concern with HMRC’s service standards and the need for improvements, possible regulation of the tax profession and the need for both bodies to support raising standards, how we should respond to the proposed changes to the ethical code on tax proposed by IESBA (see above) and how we might support the tax simplification agenda.