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Tax and regulation policy briefing

Fiona Geskes Principal Policy Adviser

Unpacking the latest developments in tax and regulation policy in a month where activity is re-starting under the shadow of COVID-19.

19 Aug 2020, 5 min read

COVID-19 and tax and regulation 

Due to COVID-19 the CBI briefly paused these regular monthly updates to fully focus on the crisis and the response needed to support the economy and society at large. 

The CBI team have been extremely busy over March to July understanding the critical issues businesses have been facing, what they desperately needed from government and then making sure that the support was delivered effectively. There has been a huge amount of change in the tax and regulation policy landscape as a result, from business rates holidays, government guaranteed loans and a huge raft of new health and safety regulation that firms have had to get their heads around. Our COVID-19 hub has been a source of key information throughout the crisis and you can see a summary of the influence and impact the CBI has had here.  

The crisis is not over yet. We know that many firms are concerned about cash flow in the 2nd half of the year as tax deferrals, loans, and grant support start to wind down. And to recover from this crisis firms need government to introduce policies that support business growth and investment into 2021. These issues are going to continue to be the CBI tax and regulation team’s primary focus for the months ahead. 

The Chancellor’s Summer Economic Statement started to set out the roadmap for that recovery, focusing on the need to stimulate demand in hard hit sectors such as retail and hospitality and to flatten the unemployment curve by support job retention and creation. But more needs to be done to protect the economy, jobs and livelihoods.  

Away from the domestic scene, activity continued on the international tax stage with two round tables the CBI and members attended: a round table on Pillar 1 of the OECD framework took place on 24 June with a separate one on Pillar 2 taking place on 21 July. A follow up round table for Pillar 2 is expected but no date has been set yet. If you would like to know, please contact Andrew Titchener. 

To cap off a busy July was Legislation Day (L-Day), which included the publication of the business rates call for evidence. The Government also announced that the next revaluation of non-domestic property in England will instead take effect on 1 April 2023. So that it better reflects the impact of COVID-19, it will be based on property values as of 1 April 2021. Additionally, the Government published the HMRC digitisation plan and the R&D tax credit consultation. Finally, the team is also pulling together responses to the uncertain tax positions consultation and the plastics tax consultations. 

Responding to the summer economic statement

The Chancellor is absolutely right to prioritise jobs in his summer statement. Flattening the daunting unemployment curve about to hit our country could not be more important. Joblessness scars lives and hits the young and most disadvantaged hardest.
— Dame Carolyn Fairbairn, Director General

While parliament may be off in recess, the work on the tax and regulation side continues at full pace and there are a number of things businesses should be aware of heading into August:  

  • Comprehensive Spending Review and Budget: this Autumn is set to be a busy one with both a full Budget and Comprehensive Spending Review expected. If you would like to feed into the submission for each, please get in touch. 
  • Open consultations:  
  1. Business rates call for evidence: To allow for sufficient time to respond, the government has separated the call for evidence into two phases. (1) Phase 1 focuses on those decisions that need to be made at the Autumn Budget and is looking for views on the multiplier and reliefs. The deadline for responses is 18 September and (2) Phase 2 covers all other elements of the call for evidence and will be reported on in Spring 2021. The deadline for responses is 31 October. 
  2. R&D Tax Credit: The Government announced a review of the scope of qualifying expenditures for R&D tax credits in the Spring Budget and the consultation was launched on L-Day on 21 July.  
  3. TSC inquiry: The Treasury Select Committee launched a call for evidence on tax reform after the Coronavirus pandemic on 17 July 2020, with a response deadline of 28 August 2020. If you would like to feed into the CBI response please contact Andrew Titchener.  
  4. Finally, the CBI is set to release its economic regulator report this month. Do keep on eye out on the MyCBI Tax and Regulation page work for this.  

On all of these consultations, as well as the submissions to the Comprehensive Spending Review and Budget we are interested to hear from you. Please do get in touch if you would like to contribute or hear more.