The non-dom reforms are substantively enacted in Finance (No 2) Act 2017 (which received Royal Assent at the end of November) and take effect from 6 April 2017 but with more anti-avoidance provisions to come in the Winter Finance Bill, the CIOT continues to engage on the changes.
The CIOT responded to the Treasury consultation ‘Financing growth in innovative firms’, part of the government’s Patient Capital Review, considering barriers to accessing long-term investment (patient capital) for the development of young innovative firms.
The CIOT commented on the draft legislation published in July 2017 in relation to non-doms and substantial shareholding exemption (SSE); these provisions are now incorporated into Finance (No 2) Bill 2017 published on 8 September 2017. In addition, the draft legislation published in July reflected a change that the CIOT had recommended in relation to hybrid mismatch arrangements. The Finance (No 2) Bill 2017 also reflects a change to SSE rules which addresses the concern we raised.
The CIOT would welcome your comments on HMT’s consultation on ‘patient capital’ which is defined as ‘long-term investment in innovative firms led by ambitious entrepreneurs who want to build large-scale businesses’. This includes consideration of many tax reliefs which play a role in promoting entrepreneurship including EIS, SEIS, VCTs, Entrepreneurs’ Relief and Business Property Relief.
Following consultation, the draft provisions introducing the cash basis for the calculation of the taxable profits of property businesses were included in Finance (No. 2) Bill 2017 at Clause 19 and Schedule 5. These provisions were dropped from the pre-election Finance Act 2017. At the time of writing we do not know whether (and from what date) the provisions may be re-introduced. However, as the proposed statutory cash basis for property businesses owes its origin, at least in part, to Making Tax Digital, it is reasonable to assume that it will be re-introduced. Therefore we continue to raise issues with HMRC based on the draft provisions.