It was a result that no-one was expecting. On June 9th the UK woke to a hung parliament. Theresa May lost her majority and Jeremy Corbyn made unexpected gains. Though the dust may not have settled yet, some of us at accountingcpd have gathered our thoughts on what this unexpected result will mean for accountants.
The election results create a great deal of uncertainty for business in the field of tax. The Finance Act 2017 was cut short because there was insufficient parliamentary time to get it all through before the election. With a hung parliament you have to wonder if all the changes (some of which are supposed to apply from April 2017) will get through. A big change for the SME business is the quarterly reporting of information to HMRC under 'Making Tax Digital' which may start as soon as April 2018. The enabling legislation was dropped from the Finance Act with the intention of including it is a second Act after the election. Not only is it uncertain as to whether this will happen on the proposed timetable, but we are still unclear exactly how this is going to work in practice. Software providers and accountants are working hard to get ready and a few people are piloting HMRC systems. It will inevitably happen but the time scale is a big challenge.
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With a hung Parliament, it is unlikely that there will be any major tax changes introduced, other than to prevent avoidance if all parties agree it is necessary. Much of the Finance Bill 2017 was dropped before the election so that essential and undisputed legislation could be passed. It remains to be seen how much of the previously legislation now makes it into Finance Bill No2, whenever that is issued and how much of it is actually enacted.
Jeremy Corbyn has already said he intends disrupting the Conservative proposals in the forthcoming Queen's speech with his party's own amendments.
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They say that the economy doesn't respond well to uncertainty, but it looks like that theory is going to be thoroughly tested, because that's what we have got for the foreseeable future.
In my dreams I imagine a cross party Brexit group developing a consensus around a soft Brexit which protects jobs and the economy from the worst impact. The worst excesses of either party will be left behind as the hung parliament means only the policies with the broadest appeal get through.
In reality all I can see is rictus. I am not sure what of the doomed Conservative manifesto can hope to make it through. Labour are threatening to post major amendments to the Queen's Speech, inserting large chunks of their manifesto, but I can't see that getting through either. So expect a quiet time with little getting through the system.