Ahead of the Chancellor's Budget, National Tax partner Tina Riches, wonders whether the Budget will convey a tone of cautious optimism or reflect greater uncertainty, in the wake of Brexit.
We’re not expecting a great deal of immediate change from the Chancellor but he may start laying out a roadmap for Britain’s economic future.
With the prospect of two Budgets this year there is huge potential for an announcement to be made on a proposal at the Spring Budget, consulted on over the summer and then confirmed by the Autumn Budget.
The Chancellor could use the opportunity presented by the Budget to identify some potential changes that could be made to a post-Brexit Britain. He could outline changes to VAT, corporation tax or support for growing businesses without the state aid rules restrictions as a bonus to those within the UK.
The Spring Budget will be delivered in the same month as a likely Article 50 declaration. There is economic uncertainty stemming from outside political changes including a new US president and elections across Europe.
Closer to home, the development of making tax digital is causing concern for small businesses, many of which are hoping that the Chancellor will listen to the comments made and slow down the pace of change. Even HMRC are struggling to develop their systems in time, let alone leave enough time for those outside to do the same. In addition, numerous tax changes are already due to take effect from the start of April. Standing still, and avoiding uncertainty, would give welcome ‘tax’ relief!
The economic forecasts, since the June referendum result, have been steadily improving with the immediate consequences not as drastic as first feared. However, there is acknowledgement within the Treasury that the two years, and potentially longer, following the official notice to leave the EU may have more instability. With that in mind Mr Hammond may wish to brush off an article he wrote in 2008, when he said ‘This succession of hasty announcements, climbdowns, confrontations and U-turns delivers the opposite of the stable environment that businesses and individuals need’. A boring Budget would therefore be most welcome for once.
With all the uncertainty we would support Philip Hammond not making wholesale tax changes. In fact, we would suggest that some of the proposals already made do not see the light of day again. HMRC’s proposal for those setting up offshore structures to notify them of the detail to ensure HMRC can identify any that may be used for criminal purposes will merely load administrative burdens on the compliant. It’s a bit like having a requirement for everyone entering a bank to notify the police so they can catch bank robbers.
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