The CIOT has responded to the Treasury’s consultation on the policy design of the proposed residential property developer tax (RPDT). The new tax on large residential property developers is intended to raise revenue to fund measures to address unsafe cladding.
The CIOT said the timescale for developing and implementing a wholly new tax ready by April 2022 is very short, underlining the practical need to align RPDT to existing legislation and systems as far as possible. Software providers will have little time to design and build an RPDT module once the design is finalised. Also, HMRC will need to have new systems and guidance in place to administer and collect RPDT by April 2022.
The Institute noted that the design and rate of the new tax are linked, explaining why the proposed rate of RPDT has not yet been announced. However, a reasonably firm indication of the rate at the earliest possible time would provide some level of certainty as the proposed tax will impact residential development projects already under negotiation. For example, if a quarterly payment regime is adopted for RPDT, a company or group with a 30 April year end could be due to make a quarterly payment as early as July 2021 but without knowing the rate or basis of charge.
The CIOT urges the Treasury to adopt existing statutory or accounting definitions as far as possible in designing the new tax, in accordance with the UK government’s objective of simplicity and the Office of Tax Simplification’s recommendations.
The CIOT also commented on the consultation process itself. While the Institute is supportive of the government’s five-stage tax consultation framework, it assumes that this consultation is taking place at stage 2 (determining the best option and developing a framework for implementation including detailed policy design). The CIOT considers stage 1 (setting out objectives and identifying options) to be a valuable part of the process that should not be omitted as it would allow for a transparent consultative evaluation of different options to achieve the government’s policy objectives.
The CIOT has responded to the Treasury’s consultation on the policy design of the proposed residential property developer tax (RPDT). The new tax on large residential property developers is intended to raise revenue to fund measures to address unsafe cladding.
The CIOT said the timescale for developing and implementing a wholly new tax ready by April 2022 is very short, underlining the practical need to align RPDT to existing legislation and systems as far as possible. Software providers will have little time to design and build an RPDT module once the design is finalised. Also, HMRC will need to have new systems and guidance in place to administer and collect RPDT by April 2022.
The Institute noted that the design and rate of the new tax are linked, explaining why the proposed rate of RPDT has not yet been announced. However, a reasonably firm indication of the rate at the earliest possible time would provide some level of certainty as the proposed tax will impact residential development projects already under negotiation. For example, if a quarterly payment regime is adopted for RPDT, a company or group with a 30 April year end could be due to make a quarterly payment as early as July 2021 but without knowing the rate or basis of charge.
The CIOT urges the Treasury to adopt existing statutory or accounting definitions as far as possible in designing the new tax, in accordance with the UK government’s objective of simplicity and the Office of Tax Simplification’s recommendations.
The CIOT also commented on the consultation process itself. While the Institute is supportive of the government’s five-stage tax consultation framework, it assumes that this consultation is taking place at stage 2 (determining the best option and developing a framework for implementation including detailed policy design). The CIOT considers stage 1 (setting out objectives and identifying options) to be a valuable part of the process that should not be omitted as it would allow for a transparent consultative evaluation of different options to achieve the government’s policy objectives.
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