The forthcoming general election and cancellation of the 6 November Budget will almost certainly have an impact on the progress of previously announced tax changes.
Due to the UK’s first December election since 1923, the amount of time now available for scrutiny of any draft legislation already published, and for the drafting and scrutiny of any new measures, is likely to be substantially curtailed.
The whole election process takes at least five weeks out of the timetable in the run-up to any Finance Act receiving royal assent.
In the normal course of events, one might expect a period of between 100 and 120 days between the first reading of the Finance Bill and royal assent. This would mean if a post-election Budget were to be held in, say, January, it would be unlikely to receive royal assent until late April or May – very possibly too late for certain changes intended to be implemented from April 2020.
Whilst in extreme circumstances Parliament has managed to pass Finance Bills within a short period of time, this has often led to the inclusion of only those measures with cross-party support, with other measures being reintroduced in subsequent Finance Bills or to the unsatisfactory situation of ill-thought-out legislation requiring to be corrected in subsequent years.
It is, therefore, possible that some measures already announced will not make it to the statute book before April 2020 and may be delayed until subsequent years. This is most likely where the policies are controversial or where the legislation is complex and the new Parliament requires more time to scrutinise the details.
Digital services tax
Arguably one of the most controversial proposals is the digital services tax. It appears a Labour government would be unlikely to delay its implementation. Others, whilst not wishing to drop the policy altogether, are more likely to want to give more time and scrutiny to the finer details. It seems likely then that the adoption of this policy may be delayed.
The proposal to extend the rules for off-payroll working to the private sector has been widely publicised. The draft legislation, however, is very complex and contains some controversial measures.
There have been calls from businesses and professionals alike to defer the introduction at least for another year to give businesses time to prepare for the financial and administrative impact of the new rules.
There is a strong argument for deferring the introduction of this policy to give sufficient time for scrutiny of the draft legislation but with broad cross-party support for the measure, this could go either way.
R&D tax relief changes
In the absence to date of detailed proposals regarding preventing abuse of R&D tax relief, following the consultation earlier this year, it seems unlikely that any changes can be passed quickly.
It may be that draft legislation has been written but not yet published but even so, such legislation is likely to be complex and will therefore need time for scrutiny.
Consequently, there must be some doubt as to whether it will be introduced from April 2020.
Some measures, being uncontroversial in nature and where draft legislation has been made available already are, however, more likely to be unaffected.
These would include, amongst others, the corporate loss restriction rules, the changes to the capital gains tax private residence relief and the regulations implementing the EU regulation known as DAC 6, all of which are likely to be passed in time for their intended implementation dates and be unaffected by any delay caused by the general election.