Income tax basis period reform and uncertain tax treatment to be explored by Lords Finance Bill Committee

The committee will focus on two areas of the draft Bill:

• proposals for income tax basis period reform
• notification by large businesses of uncertain tax treatment.

This inquiry seeks written evidence on:

Income tax basis period reform

1. How far does the reform represent a useful simplification?
2. To what extent would the reform deliver a fairer result than the current rules?
3. Would either of the alternative options mentioned in the consultation document be a better solution? If so, why?
4. Are the transitional provisions sufficiently robust? If not, how do they need to change?
5. How onerous is apportionment of profits between tax years likely to be for businesses which do not have an accounting period aligned with the financial/tax year?
6. How manageable is the timetable, especially vis-à-vis the introduction of Making Tax Digital for income tax?
7. What is Her Majesty’s Revenue and Customs doing to support businesses in making the change?
8. How important is reform of the basis period rules in the context of the Government’s 10-year strategy for the tax administration framework?
9. How much of a problem are the existing basis period rules in practice?
10. How does the proposal fit with the work the Office of Tax Simplification is doing on the date of the end of the tax year?

Notification by large businesses of uncertain tax treatment

11. To what extent do the current proposals for notification by large businesses of uncertain tax treatment take account of concerns raised in the two consultations there have been on the measure?
12. Is sufficient support being given to businesses to help them comply with the measure?

The committee is particularly interested to hear from small businesses directly affected by basis period reform and their agents.

Lord Bridges of Headley, Chair of the Finance Bill Sub-Committee, said:

“The proposed changes to the basis period will impact individuals, trusts, partnerships and unincorporated entities with trading incomes. It is important that the Government gets these changes right.

“To inform our work we want to hear from as broad a range of people and organisations as possible. If you have a view on any aspect of these proposals, please let us know what you think.”

The deadline for the submission of written evidence is 13 October 2021.

Follow the link to the committee's webpage for more information on the inquiry and details on how to submit evidence.