Select committee: Finance Bill Sub-Committee
Conclusion 11
2nd Report - Basis Period Reform and Uncertain Tax Treatments
Published 15 Dec 2021
Paragraph 63
Finance Bill Sub-Committee Draft Finance Bill 2021-22 All items in this report Report on parliament.uk ↗ Inquiry on parliament.uk ↗
Conclusion (the committee's words)
The impact of basis period reform on those businesses which are not able to align their accounting periods with the tax year, for sound commercial reasons, has not been sufficiently addressed. We are particularly concerned about smaller businesses, especially those of a seasonal nature such as those in the agricultural sector and tourism. We have questioned the wisdom of introducing both basis period reform and MTD at a time when many businesses are recovering from the economic impact of Covid.
From: Finance Bill Sub-Committee, 2nd Report - Basis Period Reform and Uncertain Tax Treatments, paragraph 63, 15 December 2021
Government response
The government responded to the whole report on 2 February 2022 (deadline 15 February 2022).
Summary written by Accountability Index from the government's response. It is not the government's own words.The Government accepts two of the Sub-Committee's recommendations and partially accepts six, with the cover letter stating it "welcomes" the view that basis period reform should continue.
- On overlap relief and guidance, the Government "cannot commit" to the 5 April 2022 deadlines, but commits to publishing basis period reform guidance "as soon as possible after Royal Assent".
- It does not accept deferring Making Tax Digital for businesses without a 31 March-5 April year end, saying it "cannot justify differential treatment purely based on the date accounts are drawn up to".
- On provisional figures, the Government is "planning to explore" the issue with stakeholders from late February 2022, with a decision on whether and how to introduce an easement "by autumn 2022".
- On uncertain tax treatment, it commits to monitoring the regime and will explore a third trigger through informal engagement, with any decision "subject to full parliamentary scrutiny and debate".