The Draft Finance Bill 2014
Chapter 1: Introduction
1. This is the tenth 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. In December 2010, the Government introduced
a 'new approach' to tax policy-making which was examined in our
report on Finance Bill 2011. It includes publishing a draft of
the Finance Bill in December, some three months before it is laid
before Parliament. Consequent on this, the House of Lords revised
the terms of reference of the Sub-Committee so that it could start
its work earlier in the tax year and examine the provisions in
the draft Finance Bill. This enables our report to be available
before the Budget and publication of the Finance Bill itself,
so that it is ready for consideration at all stages of the Parliamentary
process in the House of Commons.
3. The draft Finance Bill 2014 was published
on 10 December 2013 and the Sub-Committee began its inquiry in
January 2014. As in previous years the Sub-Committee has to be
selective as to what it can include for close examination.
4. This year, the Sub-Committee chose to look
at measures in the draft Finance Bill which deal with the taxation
of partnerships: principally the salaried members of limited liability
partnerships and the taxation of mixed membership partnerships
The draft legislation was examined in the context of the taxation
of partnerships generally and of an interim report, published
by the Office of Tax Simplification (OTS) just as we were commencing
our evidence sessions. This topic occupied most of the Sub-Committee's
time.
5. In addition, the Sub-Committee looked at the
new tax policy-making process: specifically at how the measures
on the taxation of partnerships had been handled against the five
stages of that process. Also the Sub-Committee considered how
the new process had been developing more generally in the period
since 2011 and whether the recommendations in our 2011 report
were being acted upon.
6. As in previous years, the Sub-Committee conducted
its inquiry by taking written and oral evidence from a wide range
of witnesses and from HM Treasury (HMT) and HM Revenue and Customs
(HMRC). A list of those who have contributed to the inquiry in
this way is given in Appendix 2.Their evidence can be found on
the Economic Affairs Finance Bill Sub-Committee website,[1]
including those who responded to the general invitation to provide
written evidence. The Sub-Committee would like to thank all those
who have contributed to its work. Without their help this report
could not have been written.
7. Chapter 2 contains a general introduction
to the taxation of partnerships and a summary of the OTS report.
Chapter 3 looks at the stages leading up to the draft legislation
and what was published in the draft Finance Bill. Chapters 4 and
5 examine the draft legislation, the first looking at the salaried
members of limited liability partnerships and the second the other
elements of the package. Chapter 6 examines the new policy-making
process, both as regards the partnership measures and more generally.
The conclusions and recommendations are summarised in Chapter
7.
1 See: http://www.parliament.uk/hlfinancebill Back
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