Finance (No.2) Bill 2021-22

The Bill received Royal Assent on 24 February 2022 to become the Finance Act 2022. If members have concerns about any matters now included in the Act, please let us know so that we can consider them in our future representational work. 

Welsh Government

On 2 February 2022, I gave oral evidence on behalf of ICAEW Tax Faculty (along with colleagues from ACCA and CIPFA) to the Welsh Senedd Finance Committee on the Welsh Taxes (Power to Modify) Bill. We expressed concern about the potentially wide powers to make changes to the Welsh Taxes Acts by way of regulation. In particular, we all expressed concern that the powers could be used to impose retrospective tax charges.

Raising standards agenda

Given that the government is considering the case for possible regulation of the tax profession, ICAEW has submitted a private paper to the Financial Secretary to the Treasury on matters that should be considered before any decision is made to proceed with a regulatory scheme. In particular, we are concerned about the need to establish a robust evidence base to enable an informed decision to be made on what, if any, model would be suitable. 

Making Tax Digital

We continued informal engagement with HMRC on its plans for extending the Making Tax Digital (MTD) ITSA pilot from April 2022. We remain concerned about the narrow category of taxpayers who can participate in the pilot, and we are continuing to press HMRC on the need for extensive and thorough testing of all aspects of the system before it goes live.

Consultations and representations

We submitted a number of consultation responses in the period, including a representation on the proposed changes to the R&D tax relief rules. Although ICAEW and its members are keen to support HMRC in improving compliance in the R&D sector and identifying incorrect claims and poor practices, we are concerned that the measures are not sufficiently targeted and could merely impose more costs and burdens on compliant taxpayers. Similarly, members are not confident that the proposed new rules will have a significant impact in challenging poor compliance by ‘rogue agents’. 

We also submitted further representations on the draft guidance for the uncertain tax treatment rules where we remain concerned about the proposed measures, as well as responding to the call for evidence on the umbrella company market. 

In addition to our representation on R&D mentioned, we attended a further round-table workshop with colleagues from CIOT and HMRC to consider how we should address poor practices in the R&D sector and in particular the activities of ‘rogue agents’. 

We also discussed some of the concerns with the approach HMRC has adopted in relation to subsidised R&D expenditure following the Quinn case and have agreed to hold further discussions with HMRC about this issue. 

We also made informal written representations to HMRC on a range of employment tax and national insurance contribution (NIC) issues, including class 1 NIC calculations and the freeports exemption, updates to guidance CWG2 and CWG5, and termination payments guidance. 

Finally, we met the Department for Business, Energy and Industrial Strategy Help to Grow Digital team about the grants available for purchasing accounting software. 

Committee meetings

During the period there were virtual meetings of the Private Client Committee, the Tax Policy and Reputation Committee and regular fortnightly calls of the Tax Faculty Board.

Webinars and other events 

The first of our MTDtalk webinars was broadcast as planned. During the period we also delivered an employment taxes update webinar, which was presented by Ian Holloway and Kate Upcraft, members of our Employment Taxes and NIC Committee. Kate was making her final appearance before a well-earned retirement: we wish her all the best and would like to thank her for all her support over the years – she will be greatly missed. 

Tax Faculty Business Tax Manager Richard Jones also presented an extended webinar on basis period reform. 

Last, but not least, Caroline Miskin joined Rebecca Benneyworth for the latest Tax Talk. Please keep an eye on our website for further details of all our webinars.