Parliament must review the way it makes tax law, says Law Society

18 March 2010

The highly technical and specialised nature of tax law, coupled with the lack of Parliamentary time to debate Finance Bills, is making the UK tax system complex and unclear, warns the Law Society.

In its policy manifesto, Delivering Justice, the Society includes a raft of measures aimed at improving the drafting of current and new tax law, tax administration and to ensure that new legislation is given proper scrutiny before it is enacted.

Among the proposals, which have been put together with the Law Society Tax Law Committee, is the creation of permanent tax advisory body which would consist of MPs, representatives of HMRC, professional bodies, business and commerce and academics.

The body would be charged with making recommendations for the reform and simplification of existing law; monitoring the practical application of legislation and proposing amending legislation when it is considered necessary; and reviewing new legislation as it progresses through the parliamentary process.

Law Society President, Robert Heslett, says:

"It has long been the case that the UK tax system requires clarity. Part of the problem is that the Finance Bill, which is always a large, detailed piece of legislation, requires in-depth technical knowledge to fully understand its impact. The aim of these measures is to make the legislative process by which tax laws come about more robust.

"Like all the measures put forward in the Society’s Delivering Justice manifesto good governance and better-law making are central tenets of the Society’s call to all the political parties to act on these tax law proposals."

Ashley Greenbank, Chair of the Tax Law Committee and Tax Partner at Macfarlanes says:

"It is perhaps inevitable that a proportion of any Parliamentary debate will be spent on scoring party political points, rather than on a consideration of the provisions. Parliamentary time is limited, particularly so when the passage of a Finance Bill coincides with a General Election as will be the case in 2010.

"This is not a criticism of politicians – for them all to have a full grasp of the tax law is beyond expectation. However, the way tax law is legislated needs urgent attention."

Other recommendations put forward by the Law Society in it’s Tax: Good Governance and better law making sub-manifesto include:

changes to existing law so that income tax and corporation tax are levied on a permanent basis
the division of each Finance Bill into two Bills: a short annual Bill containing the necessary changes for the year and a separate technical Bill automatic reference of each Finance Bill to the tax advisory body, whose recommendations would be debated by Parliament fixed dates for the Pre-Budget Report and the Budget.

Ashley Greenbank adds: "Putting income tax and corporation tax on a permanent footing will remove the culture of inevitability that tax laws will change each year. In addition, fixing a PBR and Budget date will provide some stability to an uncertain system and eradicate any party political influences on when the Budget is announced.

"The overall beneficiaries of these proposals would be the taxpaying public and business community who are required to wrestle with a fast changing and uncertain tax regime."

To find out more about the Law Society Delivering Justice manifesto visit http://www.lawsociety.org.uk/influencinglaw/manifesto.page