Book Description

This report on the Finance Bill 2008 concentrates on three areas: capital gains tax (CGT); residence and domicile; and encouraging enterprise. It also considers two issues which cut across these and other topics: consultation and competitiveness. On consultation, there was disagreement between private sector witnesses who felt consultation on both CGT and residence and domicile had been very poorly handled and Treasury and Revenue & Customs witnesses who did not. The Committee feels there could have been earlier and more open consultation., especially as consultation is deemed to be a key part of getting tax policy right. The possible negative impact of the proposed residence and domicile regime on UK competitiveness concerns the Committee. On CGT the Committee makes a number of recommendations designed to restore the certainty and predictability which investors need. On residence and domicile the Committee criticises the fact that the Finance Bill was not complete at the time of publication. The Committee recommends the Government provides a statutory definition of UK residence. The report surveys the clauses which make changes to the tax rules for encouraging enterprise, but would like to see the case for changes being made and published. The overall impression is that the formulation of tax policy this year has been marked by uncertainty of direction, exacerbated by poor consultation leading to a concern that the tax system is no longer sustainable or predictable. The feeling that the system is unstable and subject to severe shocks cannot be good for the competitiveness of the UK economy.