Tax Day: The difficult second album

Tax Day: The difficult second album

Tax Day was about making sure the government collects as much tax as possible while putting off the big decisions on reform until there is economic certainty, according to guests on the latest FTAdviser Podcast.

Last week HM Treasury published a raft of consultations into tax policy, in a follow-up to the Budget which was branded 'tax day'.

But like many sequels, it didn't quite live up to the hype. While some were anticipating changes to inheritance tax and capital gains tax - and there were even rumours of significant reform to pensions tax relief - in reality most of the Treasury's proposals were administrative in nature.

On this week's podcast, Claire Trott, head of pensions strategy at Technical Connection, and Chris Etherington, private client partner at RSM, discussed the Treasury's announcements.

Trott said: "A lot of it is around getting the right tax in at the right time, and a little bit sooner so that if we do get this [economic] bounce back they will get more tax in, in a more timely fashion, without a lot of hassle."

Etherington added: "They have focused pretty much on avoidance on tax day. Avoidance, if you go into the details, is a problem they have already solved.

"£1.7bn of the tax gap of £31bn relates to avoidance so it is not exactly the big ticket. There are bigger prizes to go after in terms of criminal sanctions and evasion."

Addressing why there were no substantial reforms to inheritance tax and capital gains tax, despite the fact the Treasury recently commissioned reviews into both of these taxes, Trott said it might be "one step too far" and the government was keen to take its time and see how the economy recovers.

She said: "Now doesn't feel like the time for an in depth review of anything really, because we all still don't really know where we are or where we're going to be in the next six months."

Etherington added: "Had the Budget been in the autumn we would have had a lot more interesting stuff in there, and likewise with tax day.

"They do have a constraint in terms of time. What's the size of the prize we're going at here? If you look at CGT, for example, the current revenues are around £9.5bn and if you implemented all the key recommendations from the Office of Tax Simplification that would have raised it by around £4.5bn, so not huge numbers and that's maybe why they are looking at the tax gap where you've got £31bn to have a go at."

To listen to the full podcast click play on the player above. FTAdviser's podcasts are also available on Apple Podcasts, Spotify, Stitcher and Acast.