Thursday 10th October 2024
Showground, Wadebridge

Snap General Election – Impact on Tax Already Emerging

Steve Maggs, Tax Partner at Robinson Reed Layton, Cornwall’s independent firm of Chartered Accountants and Chartered Tax Advisers, has advised that the snap election from a tax perspective appears logical.

A mandate provided following a successful General Election campaign would enable the Tories to wipe the slate clean and be free from the shackles of the ‘tax lock’ 2015 election promise.

Steve Maggs commented, “Given the short space of time I cannot see the tax pledges being sufficiently detailed. That being said, we are already hearing soundbites of pledges.”
Steve explained, “Members of the parliamentary Labour Party have already pledged to abolish the new inheritance tax ‘residence nil-rate band’, to require companies with a turnover in excess of £36m to publish their corporation tax returns, and for businesses with a turnover of below the VAT threshold to be exempt from the ‘Making Tax Digital’ filing requirements.

“Philip Dowd, the Shadow Chief Secretary to the Treasury, announced the intention to increase the ratio of the tax take as a proportion of GDP and Shadow Chancellor, John McDonnell, has pledged to target the ‘rich’, explaining that the ‘rich’ are earners of £70k or more a year.”

Another significant impact of the snap General Election is the disruption to the progress of the Finance Bill 2017 through Parliament. A Finance Act needs to be passed before Parliament is dissolved so it is likely that a truncated version will be passed with the detail coming post the election. Bill Dodwell, the President of the Chartered Institute of Taxaton (CIOT), has rightly urged the Chancellor to follow this route as opposed to including significant measures in a Finance Bill that will not go through the requisite scrutiny given the timescales.

Steve concluded, “We can almost certainly expect to hear pledges around clamping down on tax avoidance. However, as I have said many times previously, I would prefer to hear pledges around reducing tax evasion given that the vast majority of the ‘tax gap’ (the difference between the actual tax take and what is deemed it should be) is attributable to tax evasion and illegal activity. The next few weeks should be interesting!”

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