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The outcome of the loan charge review is a significant development – see HMRC’s updated guidance at tinyurl.com/govlcrgdec. We will cover the detail in a future issue of Taxation soon but it is worth commenting on the wider context.
Whatever your views on the merits of the charge there is no doubt that parliamentarians completely failed to grasp the significance of the legislation on which they were voting.
There is a theme here. Nobody in parliament seems to have appreciated that the cap on pension contributions would have had a huge knock-on effect on doctors’ pensions and that ministers would have to introduce a scheme which they themselves said ‘could constitute tax avoidance’ to mitigate the effects of the cap.
It is unreasonable to expect MPs to grapple with the complexities of legislation unaided. The professional bodies do a good job in providing briefings but this is no longer enough. Decisions still need to be taken by MPs, but we need to find a way to give them proper support.
The time has come to set up a new parliamentary office – independent of the Treasury – staffed by people with tax knowledge and experience who can analyse tax proposals and legislation thoroughly. They would then be able to give informed guidance to MPs on the real implications of tax changes.
Perhaps if that had been in place last year none of the current problems would have arisen. Shutting the stable door after the horse has bolted is not an acceptable basis for policy making.
