The Chancellor Rishi Sunak presented the 2021 Budget on 3 March. The Finance (No.2) Bill 2019-21 was published on 11 March, and received its second reading on 13 April.
In his Business statement to the House on 3 December, the Leader of the House announced that the provisional date for both the second reading and committee stage of the Taxation (Post-Transition Period) Bill 2019-21 would be Wednesday 9 December. Prior to this, on 8 December the House would consider a motion to approve Ways and Means Resolutions related to the Bill (HC Deb 3 December 2020 c452).
As Erskine May explains, “although the Finance Bill is the most common form of bill brought in upon Ways and Means resolutions, other bills the main object of which is to create a charge upon the people may also be brought forward by the Government, which must also be brought in upon such resolutions. Recent examples include the National Insurance Contributions Bill 2001–02, the HGV Road User Bill 2012–13, the Stamp Duty Land Tax Bill 2014–15 and the Taxation (Cross-border Trade) Bill 2017–19. In each case, a debate has taken place on the founding resolution or resolutions. Under modern practice, all bills brought in upon Ways and Means resolutions are Bills of Aids and Supplies … This is reflected in the words of enactment, which can sometimes take the same form as for a Finance Bill, or can take a specific form reflecting the provisions of the bill.” (para 36.43)
As a consequence, the Bill was brought in after the end of the debate on the Resolutions on Tuesday 8 December (HC Deb 8 December 2020 cc756-800; Votes & Proceedings No.148, 8 December 2020). The Bill [Bill 227 of 2019-21] and the Government’s Explanatory Notes [Bill 227-EN] are on the Parliament website. The Ways & Means Resolutions considered by the House, as well as a short explanatory note on these, are also published on the Parliament site. In addition the Financial Secretary has set out the secondary legislation making powers contained in the Bill in a letter to the Chairman of the Ways & Means Committee (see, Deposited Paper DEP2020-0831, 8 December 2020).
In a statement on 7 December, as to on-going discussions by the UK-EU Joint Committee, the Government has stated, “good progress continues to be made regarding the decision as to which goods are ‘at risk’ of entering the EU market. Talks continue this afternoon. In the light of those discussions, the Government will keep under review the content of the forthcoming Taxation Bill.” Prime Minister’s Office, UK Government statement on the UK-EU Joint Committee and the Implementation of the Northern Ireland Protocol, 7 December 2020.
Prior to the Leader of the House’s statement, the Government had indicated that it would bring forward measures relating to tariffs on movements of goods between Great Britain and Northern Ireland in a ‘finance bill’ (see, HMG, Government statement on notwithstanding clauses in the Internal Markets Bill, 17 September 2020; Evidence by Rt Hon Michael Gove, Chancellor of the Duchy of Lancaster, Select Committee on the European Union, Oral Evidence: Progress of negotiations on the future UK-EU relationship, 7 October 2020 Q7). This is to be distinguished from the annual Finance Bill, published after the Budget, to introduce the tax measures announced by the Chancellor. With the continuing impact of Covid-19, the Chancellor has made a series of statements on the economy over the last few months, and it is expected that the next Budget, intiallty planned for Autumn 2020, will be presented in Spring 2021 (Treasury Select Committee, Letter from the Chair of the TSC to the Chancellor regarding the Budget, 1 October 2020). The Government has published two tranches of draft legislation to be included in the Finance Bill to be introduced after this Budget. Further details on the general procedure for Finance Bills is in, The Budget & the annual Finance Bill, Commons Briefing paper CBP813, 26 November 2020.
In a written statement on 8 December, prior to the Bill’s publication, the Financial Secretary to the Treasury Jesse Norman confirmed these details: HCWS628, 8 December 2020
“The Government has today tabled resolutions for the Taxation (Post-transition Period) Bill as part of its preparations for the end of the Transition Period.
The Bill will take forward changes to the tax system to support the smooth continuation of business across the UK. It will ensure legislation required for the purposes of VAT and customs and excise duties to support the practical implementation of the Northern Ireland Protocol is in place by the end of the Transition Period. It will also implement further changes to the tax system which are required ahead of the end of the Transition Period, including the introduction of a new system for collecting VAT on cross-border goods.
The Government will introduce Finance Bill legislation in the spring, following the next Budget in the usual way.”
Further to this, the EU-UK Joint Committee issued a statement confirming an “agreement in principle on all issues, in particular with regard to the Protocol on Ireland and Northern Ireland”, and that, “in view of these mutually agreed solutions, the UK will withdraw clauses 44, 45 and 47 of the UK Internal Market Bill, and not introduce any similar provisions in the Taxation Bill” (Cabinet Office, EU-UK Joint Committee statement on implementation of the Withdrawal Agreement, 8 December 2020). This was confirmed by the Chancellor of the Duchy of Lancaster, Michael Gove, who is one of the two co-chairs of the Joint Committee, in a statement to the House the following day (HC Deb 9 December 2020 cc847-9).
The purpose of the Bill was also set out in a Treasury press notice: Taxation (Post-Transition Period) Bill introduced today, 8 December 2020.
The Bill received a Second Reading and completed its Committee stage, unamended, on 9 December (HC Deb 9 December 2020 cc893-941; Votes and Proceedings No.149, 9 December 2020). In turn the Bill completed its report stage and third reading on 15 December (HC Deb 15 December 2020 cc191-227; Votes and Proceedings No.152, 15 December 2020), and following its consideration by the House of Lords the following day, the Taxation (Post-Transition Period) Act 2020 received Royal Assent on 17 December.
In advance of the publication of the Bill, the Commons Library has prepared: Background to the Taxation (Post Transition Period) Bill 2019-21, 8 December 2020.
In addition to this paper, there are a number of Commons Library & Lords Library Briefing papers, Committee reports, official guidance and other publications which provide some context to this legislation.
Commons Library & Lords Library Briefing papers
- The October 2019 EU UK Withdrawal Agreement, CP8713, 18 October 2019
- The UK’s EU Withdrawal Agreement, CBP8453, 8 July 2018
The UK-EU Withdrawal Agreement Joint Committee: functions and tasks, CBP8996, 2 September 2020
- United Kingdom Internal Market Bill 2019-21, CBP9003, 14 September 2020
United Kingdom Internal Market Bill: Briefing for Lords Stages, LLN2020-123, 9 October 2020
United Kingdom Internal Market Bill and the Northern Ireland Protocol: What happened at the Lords committee stage?, Lords Library, 17 November 2020
- UK Internal Market Bill: Lords amendments explained, CBP9051, 4 December 2020
European Scrutiny Committee
Twenty-third Report: Value Added Tax: EU proposals for reform and the implications of Brexit, HC 301-xxii, 3 April 2018
“Northern Ireland Protocol: EU VAT identifier for businesses”, Twenty-seventh Report of Session 2019-21, HC 229-xxiii, 10 November 2020 pp16-25
“Northern Ireland Protocol: reduction of EU VAT rates on COVID-related medical goods”, Twenty-ninth Report of Session 2019-21, HC 229-xxv, 25 November 2020 pp31-39
“EU Single Customs Window for trade in goods”, Thirtieth Report of Session 2019-21, HC 229-xxvi, 1 December 2020 pp26-41
Northern Ireland Affairs Committee
- First Report: Unfettered Access: Customs Arrangements in Northern Ireland after Brexit, HC 161, 14 July 2020
- Oral Evidence: Brexit and the Northern Ireland Protocol, HC 767, 17 September 2020 (Witnesses: Rt Hon Brandon Lewis MP, Secretary of State for Northern Ireland; Colin Perry, Economy Director, Northern Ireland Office)
- Oral Evidence: Brexit and the Northern Ireland Protocol, HC 767, 23 September 2020 (Witnesses: Dr Graham Gudgin, Honorary Research Associate, Centre for Business Research, University of Cambridge; Professor Katy Hayward, Professor, School of Social Sciences, Education and Social Work, Queen’s University Belfast; Raoul Ruparel, Adviser, Deloitte; and Anton Spisak, Policy Lead, Trade and Productivity, Tony Blair Institute.)
- Oral Evidence: Brexit and the Northern Ireland Protocol, HC 767, 11 November 2020 (Witnesses: Colette Goldrick, Executive Director, Strategy and Partnerships, Association of the British Pharmaceutical Industry; Dr Richard Greville, Director, Distribution & Supply and ABPI Cymru Wales, Association of the British Pharmaceutical Industry.)
- Oral Evidence: Brexit and the Northern Ireland Protocol, HC 767, 2 December 2020 (Witnesses: Mark Davies, Deputy Director, Transition Task Force Northern Ireland at Cabinet Office; Ian Broadhurst, Deputy Director, VAT Reliefs, Deductions and Financial Services at HM Revenue and Customs; Mark Denney, Director of IT, EU Transition and Covid-19 Chancellor Schemes at HM Revenue and Customs; Aidan Reilly, Director for Customs and Border Design at HM Revenue and Customs; James Smallbone, Deputy Director, VAT Fraud and Transition Readiness at HM Revenue and Customs.)
House of Lords European Union Committee
- 9th Report : The Protocol on Ireland/Northern Ireland, HL Paper 99, 1 June 2020
- Letter to the Chancellor of the Duchy of Lancaster, Rt Hon Michael Gove MP, ref the Government response to the Protocol on Ireland/Northern Ireland report, 9 September 2020
Northern Ireland Assembly Research and Information Service
The Ireland/Northern Ireland Protocol – overview and potential issues, Paper 33/20, 18 June 2020
HM Revenue & Customs
Interactive dashboard presenting key economic data for the UK
In recent years concerns as to the scale of mass marketed tax avoidance schemes have led to three major initiatives to undermine this market, and encourage a sea change in attitudes, both in the accountancy industry and its customers: the Disclosure of Tax Avoidance Schemes regime (DOTAS); the General Anti-Abuse Rule (GAAR); and the system of follower notices & accelerated payments. Following these initiatives the Government has continued to introduce provisions to tackle both tax avoidance and tax evasion, including measures in both the Spring & Autumn Budgets in 2017, and the 2018 Budget. This note provides an introduction to the issue of tax avoidance, looking in detail at the development of follower notices and accelerated payments, before discussing the current Government’s approach.