UK Introduces Final Tax Law Rewrite Bills

by Robin Pilgrim, LawAndTax-News.com, London

23 November 2009

The Corporation Tax Bill and the Taxation (International and Other Provisions) Bill introduced in the UK Parliament by the Financial Secretary to the Treasury, Stephen Timms, were published on November 19, representing the final stages of the 13-year project.

These Bills are the sixth and seventh produced by the Tax Law Rewrite project, which rewrites UK direct tax law to modernize it so that it is clearer and easier to use.

In a written statement, Stephen Timms said: “These two Bills complete a 13-year task of rewriting the majority of direct tax legislation for individuals and businesses that started in 1996."

"They are the Tax Law Rewrite project’s final Bills and maintain its high standards in making tax legislation significantly easier to use. This would not have been possible without the expertise, time and commitment of all those involved in commenting on the provisions during consultation and I would like to thank them and the members of the Tax Law Rewrite project’s Steering and Consultative Committees for their invaluable help in making the project’s work such a success.”

The Bills were published in draft on March 3, 2009 for consultation, and response documents reporting on the outcome of the consultation were published on September 3.

The project attempts to present a clearer, more logical structure for tax legislation and to use plain language and other reader aids whilst not altering the main tax policies. There has, however, been some minor policy changes, where these were thought to further improve the current legislation. The project has also streamlined Parliamentary procedures for enacting “rewrite Bills.”

The project was established in 1996 on the basis of full consultation and 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.

Since 1996, a number of consultation papers have been published. The project’s first five Acts – the Capital Allowances Act 2001, the Income Tax (Earnings and Pensions) Act 2003, the Income Tax (Trading and Other Income) Act 2005, the Income Tax Act 2007, and the Corporation Tax Act 2009 – have all been well received by the tax community. The project has also rewritten the PAYE (pay-as-you-earn) Regulations in response to requests from users and representative bodies. These regulations took effect from April 6, 2004.

The Corporation Tax Bill (the second of two dealing with corporation tax) substantially completes 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 1988 or one of the Finance Acts.

HM Revenue and Customs (has also published implementation stage impact assessments on the costs and benefits arising from the new rewrite Bills.

The Financial Secretary to the Treasury announced on July 16, 2009 that the Tax Law Rewrite Project will close once these Bills are enacted, as the benefits of extending the rewrite to other parts of the tax code are not clear.

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