I have been evaluated for tax purposes under the current finance bill, which has effect, even though it is not finalised, ie. it has not gone all the way through Parliament.

My situation is sensitive to some of the finer points (it has already changed twice during the drafting of the bill). Now if some of these change on the way to royal assent, what is customary, would it have retroactive effect or would the changes have effect from the date they were decided during the stages of the law passing through Parliament..?

Or does this completely depend on how the amendments are phrased?

  • How does a law come into effect before it receives royal assent? – bdsl May 28 '17 at 16:23
  • Last year's UK finance bill was quite right on timing and had parts coming into effect before it was fully signed off. The last step was perhaps more of a formality. – nsandersen May 29 '17 at 9:12
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    Ah now I understand after reading Steve Melnikoff's answer. This is specific to taxation, and the law is brought into force by the wording of Provisional Collection of Taxes Act 1968, which presumably has received royal assent. – bdsl May 29 '17 at 15:03

Section 1(7) of the Provisional Collection of Taxes Act 1968 (PCTA) states:

Where any tax as renewed or varied by a resolution is modified by the Act renewing or varying the tax, any money paid in pursuance of the resolution which would not have been payable under the new conditions affecting the tax shall be repaid or made good, and any deduction made in pursuance of the resolution shall, so far as it would not have been authorised under the new conditions affecting the tax, be deemed to be an unauthorised deduction.

The language is a little tortuous to the layman; but as far as I can tell, it means that the final wording of the new Finance Act is the definitive version.

Hence, if a part of the Finance Bill is given provisional statutory effect under the PCTA, but is then amended before the bill becomes an act, any payment paid or received under the original wording needs to be corrected accordingly.

  • OK, so if certain parts are changed on the way through Parliament, I could effectively receive a retrospective tax bill. Well at least I am prepared for it, should it be so. – nsandersen Jul 2 '16 at 8:55
  • I suppose that's possible. (Bear in mind I'm neither a lawyer nor an accountant. Seek professional advice for a definitive answer.) – Steve Melnikoff Jul 2 '16 at 9:02
  • Will do in case it is necessary - thank you. If I have to pay it, that's fine, it is the law. I guess if I was then retrospectively charged for late payment I would start complaining, however! – nsandersen Jul 2 '16 at 18:20

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