In my wildest daydreams I sit back and imagine a Chancellor – any Chancellor – striding into the Treasury and saying

"Listen up everyone – we all know that there are substantial parts of the tax system that do not make sense.  They create perverse incentives, disproportionate burdens, and at worst they inhibit ambition and growth.  They have no defenders of any political stripe; no one would – hand on heart – say that this is the way to run a modern tax system.  The only reason they persist is rank political cowardice.  My predecessors have run scared from the political impact of changing thresholds and rates in such a way as to correct these gross anomalies.  Yes all tax changes have winners and losers.  Yes the losers tend to scream louder.  But let's have the courage of our convictions and leave behind a more effective system than the one we inherited.  I want everyone to come up with three fiscally neutral reform proposals that would improve the tax system.  This isn't about raising or lowering tax overall.  This is about making this country a better place to live and do business."

Then I wake up from my reveries and read the Spring Statement.

In these updates I refrain (for the most part) from talking about the broader economy and spending / benefits system.  All the talk about that has been heavily trailed, and you don't need to tell me that there are difficult times ahead, that those difficulties seem to be unevenly distributed, and that the outlook in two, three years' time is tremendously promising etc. etc.  It's always two or three years ahead.

Since I don't major on the economy and spending / benefits, that leaves relatively little to talk about.  But there were – buried in the documents – some announcements and consultations of interest to businesses and entrepreneurs.  So let's dig in.

Certainty

We could all do with a little more certainty.  That we live in uncertain times has become a cliché.  Perhaps certainty of R&D tax relief wasn't high on your list, but for some businesses it would be a potentially valuable way to gain certainty.  The current system seems to be – for some people - 'push it as far as you can without landing yourself in prison'.  A consultation has been launched about how some kind of advance assurance could be woven into the R&D tax relief system to reduce fraud and provide more certainty / consistency.

In a similar vein, the Government has announced a consultation to investigate a dedicated clearance system for major investment projects.

Closing the tax gap

This Chancellor joins the long line of Chancellors in the never-ending, cosmic game of Whac-a-mole, which is: trying to prevent people playing incredibly stupid games with the tax system. 20 years after the introduction of a regime which mandated the formal disclosure to HMRC of tax avoidance schemes, stubborn cowboy advisers still manage to carve out a good living advising people on how to avoid (or often evade) tax.  Rachel Reeves' proposals on this front include:

• consulting on better use of third-party data (e.g. from banks and other financial institutions) to target taxable activity at an early stage;
• consulting on reforms to the penalties system (e.g. increasing sanctions for 'repeat offenders'); and
• consulting on improved HMRC powers to tackle rogue advisers and shut down marketed tax avoidance schemes.

Into this category we could also put the ongoing push to digitise tax compliance, with the announcement today of expanded scope of digital income tax reporting for sole traders and landlords with even smaller turnover (£20k pa + from 2028).

And a bit of money is being invested into HMRC's tax collection, with more debt management and compliance staff to be hired.

PISCES

Plans for a new type of secondary trading platform (the Private Intermittent Securities and Capital Exchange System – which we can all be glad has the convenient acronym PISCES) continue to develop, and today the Government provide a substantial technical note on how the new market might work for tax-advantaged share schemes like Enterprise Management Incentive options.  The government is also consulting on how the proposed stamp duty exemption for PISCES transactions will work.

Tariffic News

Unlike some, this Government doesn't seem overly keen on tariffs and has suspended tariffs on a range of goods (including plywood and certain food products) to ease pressures on vulnerable sectors.  This continues the UK "Duty Suspensions" Programme which periodically invites businesses to submit proposals.  And the best thing is that it isn't all administered and decided at the whim of some mad and capricious emperor.

Countdown to Autumn

The Chancellor seems to have made good on her promise to only have one big-bang fiscal event per year. Which means we've got about six months to mentally prepare for the next Budget. Speculation is already growing that the Chancellor will need to do something substantial to balance the books.  I predict that growth forecasts for the immediate future will be adjusted down, but that growth forecasts for two to three years in the future will be tremendously promising.

(Image courtesy of OpenAI)