Two draft bills aimed at cleaning up UK corporation tax and international tax legislation have been published by HM Revenue & Customs.

The bills, drafted by the Tax Law Rewrite project, form part of a scheme begun in 1996 to rewrite the majority of direct tax legislation for individuals and businesses. Although the bills rewrite existing law, the general effect of the law is intended to stay the same.

Financial Secretary to the Treasury Stephen Timms MP, said: ‘Thanks to close co-operation between the project team, tax practitioners, the legal profession and business representatives, the project has once again rewritten tax legislation in a clearer and more accessible format.’

Key developments are:The Tax Law Rewrite project has already seen four acts come into force: the Capital Allowances Act 2001, the Income Tax (Earnings and Pensions) Act 2003, the Income Tax (Trading and Other Income) Act 2005 and the Income Tax Act 2007. The project has also rewritten the PAYE Regulations.

  • The Corporation Tax Bill (the second of two dealing with corporation tax) will complete the rewriting of the corporation tax code. It includes provisions about losses and gifts to charities, various forms of relief such as group relief, distributions, particular types of companies and activities, avoidance, and definitions; and
  • The Taxation (International and Other Provisions) Bill includes provisions about double taxation relief, transfer pricing, advance pricing agreements and tax arbitrage. It also relocates and where appropriate rewrites some provisions in the Income and Corporation Taxes Act and the Finance Act.

The key aims of the Tax Law Rewrite project are:

  • a clearer, more logical structure for tax legislation;
  • use of plain language and other reader aids;
  • no alteration of main tax policies;
  • possible minor policy changes to improve the legislation;
  • full consultation with interested parties; and
  • streamlined parliamentary procedures for enacting ‘rewrite bills’.

A high-level steering committee, chaired by Lord Newton of Braintree, oversees the project. A consultative committee, comprising representative bodies and other interested parties, meets on a regular basis to consider issues and the draft legislation in more detail.

Comments on the draft bills should be sent by 29 May to Jackie Bartlett, Tax Law Rewrite Project, HM Revenue & Customs, 8th Floor Bush House, South West Wing, Strand, London, WC2B 4RD.

HMRC also published consultation stage impact assessments (IAs) on the costs and benefits arising from the new rewrite bills, and has asked for comments. Copies of the IAs can be obtained from Jackie Bartlett or at www.hmrc.gov.uk/rewrite.