.png)
.png)
The government’s approach to tax policymaking is strongly criticised in a new parliamentary report that is especially damning of ‘totally incomprehensible’ rules on disguised remuneration.
The document from the House of Lords Economic Affairs Committee ‘warmly’ welcomes the Con-Lib coalition’s commitment to a consultative approach to creating tax legislation.
Committee chairman Lord MacGregor of Pulham Market said the administration is ‘on the right track… but there are lessons to be learned from this introduction of the new system’.
The Lords highlight serious inconsistencies in ministers’ efforts to establish an improved tax set-up for the UK: ‘If the government does not abide by its own rules for tax policymaking, it risks eroding the credibility of its commitment both to the new approach and to a stable and predictable tax system’.
Lack of consultation ahead of the Budget’s tax increases on the oil and gas industry is castigated for putting investment at risk, but the harshest words are reserved for the ‘lack of sufficient consultation’ on new provisions designed to combat tax avoidance through disguised remuneration – a problem that the government was ‘too late’ in addressing, and one that was tackled by legislation that at over 60 pages was ‘excessively long and complex’.
The government must act earlier to curb tax avoidance and evasion, says the report, entitled The Finance Bill 2011.
The head of the ICAEW Tax Faculty, Frank Haskew, who contributed to the document as an expert witness, told the Lords that the revamped rules on disguised remuneration were ‘an object lesson in how not to frame tax legislation’.
He added, ‘The comments I have had from my specialists in this area say that this is the worst legislation they have ever seen. It is totally incomprehensible. I have to say, from looking at it myself, I would probably agree.’
The new rules aimed at reducing instances of disguised remuneration were criticised in March by tax experts for being over-ambitious, ungainly and likely to confuse employers.
