Select Committee on Delegated Powers and Regulatory Reform Twelfth Report


ANNEX 3

INCOME TAX (EARNINGS AND PENSIONS) BILL

Note by the Tax Law Rewrite Project

CHANGES RELATING TO POWERS TO MAKE DELEGATED LEGISLATION

1.  The Bill incorporates a number of changes relating to powers to make delegated legislation. All of these changes are explained in Annex 1 to the Explanatory Notes to the Bill. References below to numbered Changes are to the Changes so numbered in Annex 1.

2.  The changes fall into two categories: the conferring of new powers to make orders and the amendment of existing powers. All of the new powers are being conferred in, or in connection with, provisions of the Bill that put Extra-Statutory Concessions on a statutory footing or reflect other exceptions, or practices currently adopted by the Inland Revenue, which operate in the taxpayer's favour.

NEW POWERS

3.  Clause 28(5) (orders not by SI: see clause 717(2)) This power is intended to allow the Board of Inland Revenue to replicate the current exception from income tax under ESC A25, which applies to locally-engaged unestablished staff employed overseas by the Crown. This new power was discussed in the Joint Committee on Tax Law Rewrite Bills (@ Questions 59 & 60). [See Change 4]

4.  Clause 343(3) (orders by SI not subject to parliamentary procedure: see clause 717(1) and (4)) This power would allow the Board of Inland Revenue to add extra types of fees to the list of deductible fees in the Table in clause 343(2) (and as such could only ever be exercised in the taxpayer's favour). It would reflect the current practice under which further fees can be added to the non-statutory list published by the Board ("List 3") that sets out the professional fees that can be deducted under the existing legislation. [See Changes 84 and 85.]

5.  Clause 716(1) and (2) (orders by SI subject to negative resolution of Commons: see clause 717(1) and (3)) The new powers would allow the Treasury to increase or further increase the limits set out in the provisions of the Bill mentioned in clause 716(2)(a), (c) and (e) to (h). The provisions are--

  • clause 179(2)(a): clause 179 gives statutory effect to a Statement of Practice which excepts from tax advances for necessary expenses [see Change 29];
  • clause 264(2) and (3): clause 264 gives statutory effect to an ESC that exempts from tax annual parties and functions [see Change 56];
  • clause 322(1) and (4): clauses 321 and 322 give statutory effect to an ESC that exempts suggestion awards from tax [see Change 78];
  • clause 323(2): clause 323 gives statutory effect to an ESC that exempts long service awards from tax [see Change 79];
  • clause 324(6): clause 324, together with clause 270 (which applies part of clause 324), give statutory effect to an ESC that exempts from tax small gifts from third parties [see Change 59];
  • clause 358(3)(b): clause 358 extends the existing exception from non-deductible business gifts expenses, the amount of which cannot currently be increased [see Change 96].

6.  Attracting the negative procedure in the Commons reflects section 828(3) of the Income and Corporation Taxes Act 1988. That procedure currently applies, for example, to orders increasing the limits in section 200A(6) of that Act (and will in future apply to orders made, in relation to the rewritten version of section 200A(6), under clause 716(2)(b) of the Bill).

AMENDMENT OF EXISTING POWERS

7.  Clause 684(2), paras 10 and 11: these are new and confer express power for PAYE regulations to make different provision for different cases, and to make incidental etc. provision. PAYE regulations will be made by SI subject to negative resolution of the Commons (see clause 717(1) and (3)), as regulations under section 203 of ICTA are at present. [See Change 147]

8.  Clause 692: this is new and confers express power for PAYE regulations to make provision relating to the organised sharing of tips. PAYE regulations will be made by SI subject to negative resolution of the Commons (see clause 717(1) and (3)), as regulations under section 203 of ICTA are at present. [See Change 150]

9.  Paragraph 54(2) of Schedule 5: this is new and extends the current power of the Treasury to make an order varying certain limits relating to enterprise management incentives so that it will apply also to other such limits. The power will be exercisable by SI subject to negative resolution of the Commons (see clause 717(1) and (3)), as the current power under paragraph 69 of Schedule 14 to the Finance Act 2000 is at present. [See Change 180]


 
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