The Government is determined to make sure large businesses are publically accountable for their tax strategies; however the break in the parliamentary process caused by the EU referendum could put the start date of one of the next round of key measures back by three months.
It was announced last year that large businesses will be required to publish their tax strategy on the internet. This is aimed at promoting greater compliance by increasing transparency, giving those businesses still determined to use the system other than as intended nowhere to hide. The number of such businesses has decreased, which is a reflection of the success of law changes over the last decade as well as the swell of public opinion being against abusive tax behaviours more generally, but the rules catch about the largest 2,000 business tax payers in the country irrespective of their track record for what would be considered as unacceptable behaviour.
The regime is contained in the Finance Bill 2016, and those affected must publish their tax strategy for periods beginning on or after its Royal Assent. Had there been a normal timetable, we might have expected the Bill to receive Royal Assent sometime in July. However, the parliamentary recess for the EU referendum has meant that the Finance Bill progress is delayed and consequently we may not see Royal Assent until October 2016.
For whatever reason, there are very few large businesses with July and August accounting period ends but September year-ends are more common. They are now all left wondering whether they will have to comply this year or next. However, those businesses with December and March year-ends are unlikely to be affected if Royal Assent moves to October.
The uncertainty this creates for affected businesses is very regrettable, and given how keen the Government has been to be seen as tough on tax avoidance, it is perhaps surprising that the implementation of this key measure is delayed so easily.
If you would like to discuss this further, please contact Rebecca Reading or your usual RSM contact.