The Committee of the Whole House for the Finance Bill 2016, which had been delayed due to the referendum, took place yesterday (28 June). Despite the renewed momentum, Royal Assent, which would typically be expected in July just before the summer break, will be delayed until the autumn. October has been suggested.
The Bill contains a number of measures that have a proposed commencement date of Royal Assent. One such measure was the proposed changes to withholding tax on royalties paid, which were announced in the March 2016 Budget. A Policy Paper released by HMRC on Monday makes clear that these rules took effect on 28 June 2016. It has clearly been noticed that Royal Assent is likely to delay implementation, and that the government has taken specific steps to get this into law.
Positioning these changes as an anti-avoidance measure helps HMRC justify bringing them into force without notice. Technically, though, one could argue that to the extent this was about abusive practice, the rules took hold from Budget Day, and the remaining provisions are more about clarification and making sure the rules are consistent with the direction of travel in international tax. They have been brought in now, though, nevertheless.
This appears to be an exception. Other key measures will be delayed, for example, the requirement for large companies to publish their tax strategy. In guidance issued last week, it was confirmed that this would apply for accounting periods beginning on or after Royal Assent. This measure was announced last year and most of the companies affected will have seen it coming and the delay may not cause too much concern.
What was more unexpected was an amendment to the Bill discussed in Parliament yesterday proposed by Caroline Flint MP, to also require these companies to publish their country-by-country reports - essentially key data about their tax position internationally that from 2016 need to be sent to HMRC and shared between tax authorities.
Earlier this year the government stated that public country-by-country reporting would come. George Osborne said that the UK would seek to promote this internationally. Yesterday David Gauke made it quite clear that the time was not right to make this step unilaterally but despite the amendment being defeated, eventual publication does appear to be inevitable.
If you would like any more information on this issue please get in touch with Rebecca Reading, or your usual RSM contact.