The surprising General Election result will undoubtedly have an effect on tax policies. Traditionally the Budget after an election is used by a Government to fill the holes in its finances. With a precarious position dependent on the DUP (Democratic Unionist Party) further tax raising measures may be more difficult and indeed “courageous tax reform” is likely to be off the agenda.
The parts dropped from the Finance Bill will probably come back especially since the key ones on Corporation Tax in terms of loss relief and interest relief are due to raise nearly £1.5 billion this year.
However, with such a small majority, there will be a temptation to kick very controversial measures into the long grass such as Making Tax Digital. Whilst Corporation Tax reform will probably continue along the lines set up by the OECD BEPS proposals little else of substance is likely to happen unless there is an overwhelming consensus created in a particular area that reform is needed.
Finally, one of the higher profile casualties on Thursday night was Jane Ellison who was Financial Secretary to the Treasury. She showed a keen appreciation of how business worked from her extensive time at John Lewis. She will be missed and it is hoped that her successor will show the same willingness to engage with the tax profession to create a more rational and efficient tax system.
