Tax Chaos Feared As A Result Of Delayed UK Budget

by Jason Gorringe, Tax-News.com, London

01 February 2002

Having been away on compassionate leave since the tragic death of his baby daughter earlier this year, Chancellor Gordon Brown, who famously likes to be 'hands on' where the fine print of the budget is concerned, has elected to delay his budget announcement until April 17th - 11 days after the commencement of the new tax year.

Although the UK business sector is sympathetic regarding the reason for the delay, rumbles of discontent can be heard nonetheless, and there are fears that a delayed budget could cause tax chaos for companies, employers, and individual taxpayers alike. According to reports, employers in the UK fear that major tax changes could catch them on the hop, due to the delay in receiving the information, forcing them to hand out refunds for any overpaid tax.

However, it is understood that the Revenue Department will be given extra time to make any alterations necessary, and in a statement issued by the Inland Revenue, employers and pension providers are asked to: 'put into effect any consequent changes to codes and tax tables on the first pay day after 17 June 2002, backdated to the start of the tax year.'

Concerns have also been expressed that as the Chancellor's Finance Bill needs to receive royal assent by August 5th, there will be even less time for Parliament to debate important or contentious issues.

Speaking to Accountingweb, PwC Partner, John Whiting, attempted to reassure UK taxpayers. 'Changes to personal allowances and tax rates are effective from 6 April and with a March budget can be ready to go by then. By having the budget in April, employers will have to do a certain amount of adjusting and amending - more work for them, although we do already have the personal allowance figures from the pre-budget report in November which will help,' he explained.

However, Mr Whiting warned that the Treasury could lose out on revenue from increases to taxes which normally come into effect immediately, such as petrol and diesel duties.

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