The Finance Bill 2008
CHAPTER 1: INTRODUCTION
1. This is the sixth report in a series which
began in 2003 when the House of Lords Select Committee on Economic
Affairs first appointed a Sub-Committee to inquire into selected
aspects of that year's Finance Bill. The Finance Bill Sub-Committee's
inquiries address technical issues of tax administration, clarification
and simplification rather than rates or incidence of tax.
2. Each year the Sub-Committee aims to publish
its Report in time to enable members of the House of Commons,
if they so wish, to draw on its recommendations in moving amendments
to the Bill at the Report Stage. This year members of the Commons
Public Bill Committee will also be able, if they so wish, to refer
to the recommendations of the report in relation to residence
and domicile discussed in Chapter 4. The report should also inform
the second reading debate of the Bill in the House of Lords.
3. As in previous years the Sub-Committee selected
a few topics for close examination. If it chose to examine the
whole Bill, its treatment of each topic could only be cursory.
4. This year the Sub-Committee chose three topics
which it considered of particular importance. It also considered
two issues which cut across these matters and indeed across many
other policy initiatives which the Sub-Committee did not examine.
First, how the consultative process has been carried out on these
topics and whether improvements to the process could be made.
Second, how, for better or worse, these tax changes affect the
international competitiveness of the United Kingdom.
5. The first topic concerned the changes to capital
gains tax announced in the 2007 Pre-Budget Report and Comprehensive
Spending Review (PBR). These changes were subsequently complemented
by the introduction of the entrepreneurs' relief.
6. The second topic, again announced in the 2007
PBR, related to the new tax rules on residence and domicile, particularly
changes to the remittance basis for those who are not domiciled
in the United Kingdom. These provisions have subsequently been
considerably altered. At the time this report went to the printers,
the Government's first draft amendments for the Public Bill Committee
had been published for comment and other amendments were beginning
to appear on the Order Paper.
7. The third topic involved changes to the Enterprise
Investment Scheme—not only the changes in the Finance Bill
itself, but three papers published on Budget day. These were "Enterprise:
unlocking the UK's talent" published by HM Treasury and the
Department for Business Enterprise & Regulatory Reform; "The
Enterprise Investment Scheme: a consultation document" published
by HM Treasury (HMT) and HM Revenue & Customs (HMRC); and
a "Study of the impact of the Enterprise Investment Scheme
and Venture Capital Trusts on company performance" by the
Institute of Employment Studies at the University of Sussex and
published by HMRC.
8. As in previous years, the Sub-Committee conducted
its inquiry by taking written and oral evidence from leading professional
and business organisations and from HMT and HMRC. This year the
Sub-Committee also took evidence from two academic institutions.
A list of those who have contributed to the inquiry in this way
is given in Appendix 2: their evidence is in Volume II of this
report. The Sub-Committee would like to thank all those who have
contributed, often at short notice, to its work. Without their
help this report could not have been written.
9. The Sub-Committee's findings on the two cross-cutting
issues are in Chapter 2 of this report; the three chosen
topics are in Chapters 3 to 5. Its conclusions are in Chapter
6.
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