Isn’t it ironic, don’t you think…
Senior Partner’s (b)log – Star-Date 21 March 2013
write this Blog after having heard the Chancellor’s Budget speech and after having digested some of the detailed that has been published by HM Treasury and HM Revenue & Customs. I suppose I am just getting old(er) and cynical, but I was fascinated by the irony of some of the pronouncements, such as:-
As ever, the Budget was dominated by anti-avoidance measures, but the flagship announcement was the coming into force (from the date of Royal Assent of the Finance Act) of the General Anti-Abuse Rule (“GAAR”). This was coupled with the introduction of further draconian powers being given to HMRC to obtain information from Card Payment Processing companies. In the light of the ever tightening rules on the Disclosure of Tax Avoidance Schemes (“DOTAS”) originally introduced by the 2004 Finance Act, and the ever growing myriad of specific, targeted anti-avoidance provisions, one can’t help wondering if a GAAR is really needed. Surely it would be better to have a simplified tax system supported by well drafted, loop-hole free legislation?
Two points spring to mind. First, is it not irritating that a measure that is clearly regarded as a “flagship” one is trumpeted on two successive days, even though it does not come into effect until the Autumn of 2015? Secondly, is it not ironic that this announcement came only two months after the decision to tax child benefit came into effect, especially when the people suffering the child benefit tax potentially earn far less than the people able to take advantage of the new childcare relief?
The Government say that they want to encourage people to save for their retirements and yet the rules on pensions are subject to continual change, usually to make them less and less attractive. The proposals to reduce the annual amount that can be contributed, tax-efficiently, into pensions, and to reduce the life-time limit for pension savings seems a very odd way of achieving this aim.
The Chancellor, quite accurately, described employer’s NICs, which are levied at 13.8%, as the “Jobs Tax”. The decision to provide a mechanism to refund £2,000 of this tax is to be welcomed, although it is a pity that the initiative was delayed until April 2014. However, the real burden on employers is red-tape and the draconian penalties that can be imposed for relatively simple errors and oversights. In this regard, the introduction of the Real Time Information (“RTI”) regime for PAYE administration from 6 April 2013, and the new Auto-Enrolment provisions for work-place pensions are a far greater challenge. It was notable that the Chancellor did not feel it appropriate to mention these measures when talking about kick-starting the economy and encouraging job creation.
That’s all for now, loyal reader. Further ramblings and rantings will be posted shortly.
And so to bed…Talk to Barnes Roffe today