Landmark Reached In UK Tax Law Rewrite Project

by Robin Pilgrim, LawAndTax-News.com, London

05 March 2009

Modernising the UK's direct tax law took another step forward on March 3, as two new draft bills rewriting corporation tax and international tax legislation were published by the Tax Law Rewrite project.

Financial Secretary to the Treasury, Stephen Timms MP, announced: "These two Bills will complete the task of rewriting the majority of direct tax legislation for individuals and businesses that started in 1996."

He added: "Thanks to the close co-operation between the project team, tax practitioners, the legal profession and business representatives the project has once again rewritten tax legislation in a clearer and more accessible format."

According to the Treasury, the Bills rewrite the law without changing its general effect and have wide support amongst the tax community. Key features are:

• The Corporation Tax Bill (the second of two dealing with corporation tax) will substantially complete the rewrite of the corporation tax code. It includes provisions about losses and gifts to charities, various reliefs such as group relief, distributions, particular types of companies and activities, avoidance, and definitions;
• The Taxation (International and Other Provisions) Bill includes provisions about double taxation relief, transfer pricing, advance pricing agreements and tax arbitrage. It also relocates and where appropriate rewrites some provisions which would otherwise have been left unhelpfully in the Income and Corporation Taxes Act or one of the Finance Acts.

The project was established in 1996 on the basis of full consultation. The project's first four Acts included the Capital Allowances Act 2001, the Income Tax (Earnings and Pensions) Act 2003, the Income Tax (Trading and Other Income) Act 2005 and the Income Tax Act 2007.

The project aims to provide a clearer, more logical structure for tax legislation with the use of 'plain English.'

A high level Steering Committee, chaired by Lord Newton of Braintree oversees the project. A Consultative Committee, consisting of representative bodies and other interested parties, also meets on a regular basis to consider issues and the draft legislation in more detail.

The project is currently consulting informally a number of representatives from accountancy, legal and business organisations about the support and scope for future rewrite work.

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