The House of Commons' Finance Bill Sub-Committee has issued a call for evidence seeking views on the draft legislation published in Finance Bill 2021-22 for the Reform of Basis Periods and the Uncertain Tax Treatment provisions.

This call for evidence follows the completion of the consultations covering both Basis Period Reform and Uncertain Tax Treatments adopted by large businesses.

The questions in the call for evidence are as follows:

Income Tax basis period reform

1. How far does the reform represent a useful simplification?

2. To what extent would the reform deliver a fairer result than the current rules?

3. Would either of the alternative options mentioned in the consultation document be a better solution? If so, why?

4. Are the transitional provisions sufficiently robust? If not, how do they need to change?

5. How onerous is an apportionment of profits between tax years likely to be for businesses that do not have an accounting period aligned with the financial/tax year?

6. How manageable is the timetable, especially vis-à-vis the introduction of Making Tax Digital for Income Tax?

7. What is Her Majesty’s Revenue and Customs doing to support businesses in making the change?

8. How important is reform of the basis period rules in the context of the Government’s 10-year strategy for the tax administration framework?

9. How much of a problem are the existing basis period rules in practice?

10. How does the proposal fit with the work the Office of Tax Simplification is doing on the date of the end of the tax year? 

Notification by large businesses of uncertain tax treatment

1. To what extent do the current proposals for notification by large businesses of uncertain tax treatment take account of concerns raised in the two consultations there have been on the measure?

2. Is sufficient support being given to businesses to help them comply with the measure? 

Submissions for both areas should be submitted by 13 October 2021.

Useful guides and articles on this topic

Consultation: Income Tax Basis Period reform
HMRC have published a new consultation ‘Basis period reform’ alongside a policy paper and draft legislation that propose a simplification of the Income Tax rules for the self-employed by allocating trading profit to tax years regardless of the business’ accounting period end date.

Impact of Making Tax Digital for VAT: new research
Research published in July 2021  reveals a mixed picture regarding benefits that Making Tax Digital (MTD) for VAT can offer businesses. 

Uncertain Tax Treatment guidance released
HMRC have released guidance to accompany the draft legislation that they released which covers Uncertain Tax Treatment (UTT) for large businesses.

Notification of uncertain tax treatments by large businesses: consultation responses
The government intends to have large businesses notify HMRC when uncertain tax treatments have been adopted within a tax return. The consultation is now closed and a summary of the responses has been published.

External links

The Finance Bill Sub-Committee Call for Evidence

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