CC(97)Minutes (5)
24 September 1997
I attach the minutes of the fifth meeting of
the Consultative Committee.
JULIE McCLATCHEY
Secretary to the Consultative Committee
Neil Munro (Chairman)
Adam Broke (Special Committee)
Graham Aaronson (Revenue Bar Association)
Richard Baron (IoD)
David Brodie (TaxAid)
Russell Chaplin (BCC)
Michael Cole (ABI)
Malcolm Gammie (Law Society)
Simon McKie (ICAEW)
Cunnie Rankin (ICAS)
Mavis Sargent (ACCA)
Peter Hobbs (ICAEW)
Rosa Tormo (CBI)
Jane Vass (Consumers' Association)
James Rouse (CIOT)
Scott Rae (Law Society Scotland)
Paul Tipping (BBA)
Geoffrey Sellers
Margaret Hill
John McCormick
Stephen Bousher
Karolyn Cooper
Clare Scott Booth
Jenny Ottewell
Barry Mahoney
Claire Francis
Simon Habesch
Brian Chapman
Suzanne Hardy
Louise Boyle
Wendy Sampson
Amanda Clarke
Secretary:
Julie McClatchey
Minutes of fifth meeting and matters arising.
1. Some members felt that the minutes should give more details of the variety of views expressed. The Chairman said that the minutes aimed to convey the general feeling of the discussion, especially to show where there was broad agreement. Obviously if there was no consensus on a particular issue the minutes would record this. If there was disagreement over a fundamental issue, it might have to be referred to the Steering Committee.
2. The Project Team would be setting up a focus group on Capital Allowances, and invited the Committee to submit names of experts in that area to be members of the group.
First Exposure Draft - Oral Report
3. There had not been very many detailed responses to the Exposure Draft so far, but there had been general acceptance of the proposed structure, and approval of the user-friendliness of the rewritten legislation. There had been a range of detailed suggestions for improvement, which the team were considering.
4. The published draft had taken account of comments made by the Consultative Committee, although where there had been a variety of views, the Project Team had taken a view on the best way forward.
5. The Project Team emphasised that they were committed to flagging up all changes in policy, although they had not yet decided precisely how this would be done.
CC(97)18: Basis periods
6. John McCormick introduced the members of his team who were attending the meeting - Jenny Ottewell, Clare Scott Booth and Barry Mahoney.
7. He emphasised that this paper was very much work in progress, circulated at this early stage to allow more time to hear and take account of views. He asked for :
Length of rewritten clauses
8. There was a general view that the added length was worthwhile in order to achieve greater clarity. Some of the extra length was to cope with the clarification of some of the more complex material on change of accounting date. The Committee suggested that flow charts could be used to help readers through some of the more complex areas. The Project Team were not convinced that flow charts would be appropriate in the rewritten legislation, but agreed that they might sometimes be useful in the commentary.
Accounting date in relevant year of assessment
9. The focal point in the rewritten legislation was the accounting date in the relevant year of assessment. The Committee generally felt this was an improvement on the existing situation (where the point of reference is the date on which the basis period for the previous year ended), but thought it would need further examination to ensure that it worked. The Project Team said they would be grateful for comments on that, particularly giving examples where members thought it unworkable.
Accounts made up to 31 March
10. The draft clauses attempted to bring an extra statutory concession into the legislation. The concession allows that, when a taxpayer regularly makes up accounts to 31 March, the Revenue is willing to treat the accounts as if they had been drawn up to 5 April.
11. The Committee generally agreed that it would be helpful for taxpayers to legislate this concession, and there was a general feeling that where possible concessions should be legislated.
"Set up and commenced" and "permanently discontinued"
12. The draft clauses proposed to replace these phrases with "starts to carry on a trade" and "permanently ceases to carry on a trade". The Committee generally welcomed this proposal.
General comments
13. There was some discussion of the structure of the rewritten legislation, primarily focusing on the provisions dealing with the rules for changes of accounting date. The Committee acknowledged the importance of these provisions, and generally agreed with the Project Team's view that they should be included in primary - rather than secondary - legislation. However they felt that these provisions should not be in the part dealing with the main rules.
14. The Committee discussed the possibility of putting the provisions into a schedule. Some felt that schedules could be a very useful tool, particularly for very complex, or minority, situations. Others were concerned that the provisions could then be physically quite far apart from the main basis period rules. The Committee agreed that it was important to keep related provisions together if possible.
15. The Committee suggested in addition that perhaps some signposting at the beginning of the clauses could be used to guide users to the relevant parts. The Project Team said they would consider that further.
Layout
16. The Committee generally found the layout helpful and in particular the use of boxes around the tables which were included in the rewritten clauses.
Detailed drafting comments
17. The Committee made a number of detailed drafting comments which the Project Team noted and said they would consider further. They generally welcomed the 'step by step' approach to calculating the amount of relief due in Clauses 3.3.21 and 3.3.22.
CC(97)19: Single Company Trading Losses
18. Margaret Hill introduced the members of her team who were attending the meeting - Claire Francis, Simon Habesch and Brian Chapman.
19. Margaret Hill explained that the work on single company trading loss provisions was aimed at fulfilling two separate commitments the project team had made to carry out two experiments at an early stage in the rewrite:
20. The team had originally planned to cover both of these in the one Technical Discussion Document. However, in the light of comments made by the Steering Committee, they had decided to split the paper into two.
21. The paper for discussion today was a draft of the document which tests the basic rewrite techniques on a complex piece of legislation. Margaret Hill emphasised that the trading loss provisions chosen were for illustrative purposes only: there was no intention that these corporation tax provisions should be legislated at this stage in the rewrite project. The team planned to show a revised version to the Committee for their October meeting. They then proposed to clear the revise, amended as necessary in the light of the Consultative Committee comments, with the Steering Committee by correspondence, and to publish the document in November.
22. The Steering Committee had discussed the paper the previous week and their general feeling was that the structure of the rewritten legislation was useful and helpful. They felt that simplification of the wording could go further, and also that it might be more helpful to attach some of the detailed discussion, currently up front, to individual clauses.
23. There were two particular points on which the team would appreciate the views of the Committee:
Application of rewrite techniques
24. The Committee generally felt that the rewritten legislation was much clearer than the existing law. They commented particularly on the usefulness of the tables and suggested that this approach could be tried in other areas as well. They agreed with the Steering Committee's view that there was scope for further simplification of the language.
General comments
25. The Committee commented on the possible changes to the rewritten clauses to remove ambiguities in the existing law. The Project Team said that they were primarily seeking views on how the rewrite techniques worked. They emphasised that this rewritten legislation was not presented as draft clauses for enactment, although it would obviously be included in a later rewrite of the wider area. At this stage, the team therefore hoped for views on the aim of the experiment. The Committee accepted this, but felt that there was a risk that people would concentrate on these possible changes rather than the techniques being used. The Project Team said they would look again at the commentary to underline this point.
26. The Project Team reminded the Committee that their overall aim in proposing any minor changes would be to achieve a balanced package (in terms of whether ambiguities etc. were resolved in favour of the Revenue or the taxpayer). It remained to be seen how easy this would be to achieve in practice. But every proposed change would be clearly flagged up and considered on its merits. If the Consultative Committee was unable to agree any particular change, it might be necessary to refer the question to the Steering Committee.
Comments on the consultative process
27. Some members of the Committee were concerned about the interaction between themselves and the Steering Committee. They felt there was a potential overlap in the kind of discussion which would take place, arising from the fact that the paper had already been seen and discussed by the Steering Committee. They suggested that as a general rule it would be preferable for the Consultative Committee to discuss a paper first. Their comments could then be passed on to the Steering Committee for their discussion. This would help the Steering Committee to concentrate on issues which were either in dispute or where a decision was needed.
28. The Project Team said that they had envisaged the role of the two Committees in commenting on papers and draft legislation would be different. They had expected the Steering Committee to focus on general issues (although any detailed points which they might offer would be very welcome). They had thought that the Consultative Committee, on the other hand, would mainly concentrate on the detail of the rewritten legislation. They did not foresee difficulties in the Committees looking at papers in parallel, but said they would think further about the process and relationship between the two Committees, and consider whether it would be possible to schedule discussions by the Consultative Committee in advance of the Steering Committee.
29. Some members of the Committee were also concerned about the insufficient time allowed for proper discussion of all the items on the agenda. Possible options included:
30. The Project Team accepted the point and said that they would consider how to address it.
Julie McClatchey
Secretary
24 September 1997
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