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Changes to the Revenue's interpretation of tax legislation will not be regarded as legally significant unless they have been unless prompted by court rulings, according to the government in a new protocol on unscheduled announcements of changes in tax law
The text in full reads: ‘The government has made clear its aim to strike the right balance between restoring the UK tax system's reputation for predictability, stability and simplicity and preserving its ability to protect the Exchequer by making changes where necessary. In particular, changes to tax legislation where the change takes effect from a date earlier than the date of announcement will be wholly exceptional.
‘Ministers undertake to observe the following criteria when considering a change to tax law which will:
- be announced other than at Budget; and
- take effect before the legislation implementing the change is enacted.
‘Such changes to tax law will normally only be announced other than at Budget where:
- there would otherwise be a significant risk to the Exchequer;
- significant new information has emerged to identify the risk or indicate its scale; and
- changing the law immediately is expected to prevent significant losses to the Exchequer.
‘Announcements will usually take the form of a written ministerial statement to Parliament before 2pm.
‘Legislative changes announced in this way will be confined to addressing the risk to the Exchequer that has been identified. A change in HMRC's interpretation of the law (unless prompted by a court ruling) will not be regarded as “significant new information”.
‘Where ministers believe that such a change is justified, the process will be as follows:
- a minister will make a public announcement of the intention to change the law and make clear that the change will take effect before the legislation is enacted;
- the public announcement will be accompanied by the technical detail necessary to amount to a sufficiently clear warning of the nature of the change and its timing;
- HMRC will publish the written ministerial statement and draft clauses on the HMRC website as soon as practicable after the announcement to Parliament. If, exceptionally, draft clauses cannot be published on the day of the announcement, a detailed technical note explaining the nature of the proposed change and the reasons for it will accompany the announcement; and
- legislation to give the measure effect will be included in the next available Finance Bill.
‘While the government will not invite comment on the intention to legislate, the nature of the change or on its timing, it will consult after the announcement to establish whether the draft legislation would achieve its objective and change the law as intended. Subject to the risk of forestalling, consideration will be given to consulting informally in confidence before an announcement is made.
‘As part of the normal Budget process, the Office for Budget Responsibility will scrutinise the estimates of Exchequer impact associated with any change to tax policy.’
