Joint Committee on Tax Simplification Bills Minutes of Evidence



APPENDIX 1

NOTE BY INLAND REVENUE

DRAFT AMENDMENTS TO CLAUSE 6

DRAFT AMENDMENTS

  Clause  6,  page  4,  line  27,  after 'account' insert '(see subsections (2) to (6))'.

  Clause  6,  page  4,  line  28,  at end insert '(see section 12 of ICTA)'.

THE FORM OF THE DRAFT AMENDMENTS

  The draft amendments are different from Lord Brightman's suggested amendment.

  Lord Brightman's amendment would insert a new subsection (2A) after subsection (2) of clause 6. But the reader might feel that the new subsection (2A) interrupts the flow of the rules about "period of account" (which are contained in subsections (2) to (6)).

  An alternative to the draft amendments would be to insert Lord Brightman's suggested subsection at the end of the clause. But this might not be as helpful to the reader who is puzzled about the difference between "period of account" and "accounting period".

IN FAVOUR OF THE DRAFT AMENDMENTS

  These amendments would probably be helpful to the reader whose first encounter with tax legislation is with the Capital Allowances Bill.

AGAINST THE DRAFT AMENDMENTS

  Those who are interested in obtaining capital allowances for corporation tax purposes are likely to be aware of section 12 of ICTA and the fact that it applies generally in legislation about corporation tax (as a result of section 834(1) of ICTA). This is on the basis that they will probably have already investigated general rules about liability to tax before investigating rules about allowances. The notes which accompany corporation tax returns include a detailed explanation of the meaning of "accounting period".

  Clause 6 and the reference to "accounting period" were discussed in some detail by the Tax Law Rewrite Project's Consultative Committee. The clause reflects the outcome of that discussion.

FREQUENCY OF USE OF THE PHRASE "ACCOUNTING PERIOD" ETC

  An electronic search for accounting period" in an annotated collection of statutes about direct taxation produced 2,316 "hits". Many of these "hits" are in the annotations. But this gives a very rough indication of the frequency of use of the phrase.

29 January 2001


 
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