As previously announced, 23 March was to be ‘Tax Day’, a day when all the consultations and discussion documents normally released on Budget Day would instead be released to “give a range of important but less high profile measures greater visibility”.
Tax advisers around the country wondered whether this was indeed just the corralling together of items not required to be included in the Budget, or whether there was to be a hidden surprise, an early Easter Egg, hidden within the publications. Many had speculated whether a new consultation on the reform of Capital Gains Tax (CGT) would be found, something to give an indication of how changes might look, given we have all now agreed that changes to CGT remain on the table, even if not delivered in Budget 2021.
Depending on your viewpoint, the good (or bad) news is that no such consultation has been included in the comprehensive list published today by the Treasury and HMRC. While 35 separate topics are mentioned, under three distinct headings (Modernising Tax Administration, Tackling non-compliance and Further Tax Policy Announcements), the consultations are generally administrative in nature or are in response to a single defined issue, with a proposed remedy.
While CGT is not mentioned, the taxation of trusts, last consulted on in 2018 is covered, with the brief response that “the responses [to the consultation] did not indicate a desire for a comprehensive reform of trust tax at this stage. The government will keep the issues raised under review.” The lack of changes will be welcome news to all those hard-working and undervalued trust tax advisers, such as yours truly, who are still recovering from the 2006 changes to the trust regime.
But is the lack of a CGT consultation a good thing or a bad thing? Again this depends if your glass is half full or half empty. Those wishing to see things positively might therefore conclude that no significant changes to CGT are on the horizon, as surely the Government would not be so short-sighted as to introduce far-reaching changes without giving the profession and professional bodies chance to comment on the implications of such new rules.
On the other hand, those more cynical might conclude that the Government is just short-sighted enough to introduce far-reaching changes without giving the profession and professional bodies chance to comment on the implications of such new rules.
One final note: while the foreword to the document published today says that the aim is to “increase the overall quality of tax policy and legislation, on which millions of taxpayers ultimately rely”, it cannot be denied that the Chancellor made a pretty penny in advance CGT given all the uncertainty surrounding a potential change to rates in the March Budget.
Indeed, at Claritas we alone completed ten deals in the first quarter of 2021, having seen increased deals activity for some months. If Mr Sunak can simply maintain the same level of disquiet for another year, he can raise additional sums in tax without actually having to make any changes to CGT.
