AAT Public Affairs & Public Policy activities: March 2022

Every month AAT summarises some of the key Public Affairs & Public Policy activities undertaken on behalf of our members.

Below you will find some key highlights for March 2022. 

If you would like any further information about any of these issues, please contact Phil Hall, AAT Head of Public Affairs & Public Policy via twitter or via email. 

Time for Change?

AAT’s Time for Change: A fairer more effective tax system report was published in March.

It was incredibly well received by a range of organisations and individuals including MPs and Peers, other professional bodies, accountants and business groups.

The report brings together a diverse range of leading thinkers from across the political spectrum to express their views on tax reform under a unifying but broad theme, “a fairer more effective tax system.”

Whilst few, AAT included, are likely to agree with every reform proposed by such an eclectic mix of contributors, AAT’s primary intention in bringing together a diverse range of opinion formers to express their views on such matters is to stimulate debate and this latest AAT Time for Change report certainly serves its purpose in that respect.

A further Time for Change report, on education policy, is due to be published towards the end of the year.

Spring Statement 2022

Income Tax and NICS

AAT was quick to alert Parliamentarians to the fact that that aligning the NICs threshold with income tax this year, and a reduction in the basic rate of income tax to 19% from April 2024, is being funded by government imposed fiscal drag, which sees more and more people paying tax at higher levels due to inflation and earnings growth. Over one million people will be dragged into the 40% higher rate tax band by 2025-6, taking those in this tax bracket to 5.9m equating to over 17% of those paying income tax. To put this into perspective, less than 4% were in this bracket back in 1990-1991.

Fuel duty

The Spring Statement confirmed a reduction in duty on diesel and petrol by 5 pence per litre, for 12 months. AAT stressed to MPs that this does nothing to help inequality given Department for Transport data shows the top 20% of UK households spend around five times more on fuel than the bottom 20%.  Environmental considerations seem to have taken a back seat too. There was much evidence to suggest the rises in fuel prices were prompting a welcome acceleration of the switch to Electric Vehicles (EV) with sales rising well in excess of forecasts. That may now be undone, temporarily I hope, by this reduction in fuel duty.

Government could scrap fuel duty completely and still meet its net zero ambitions as AAT suggested many years ago. This was also a recommendation we made to the cross-party Transport Select Committee last year and was pleasingly adopted by the Committee a few weeks ago.

VAT zero rating

AAT responded to the announced VAT zero rating on the installation of energy saving materials by stating it is a small step in the right direction. It’s something that AAT has recommended on several occasions and although only represents a 5% saving is welcome, nevertheless. However, it is disappointing that the zero rating is for a time-limited period. If we are serious about reaching net zero, the government should not just make the VAT exemption permanent, it must go much further and faster, incorporating renewables into housing policy and providing a range of incentives for homeowners and housebuilders to install solar panels, heat pumps EV chargers and the like as well as incentivising businesses to go green. It’s not just VAT on renewables either but a range of other environmental taxes.

As AAT has repeatedly highlighted, improvements to the Plastic Packing Tax (due to come into force next month) and the Deposit Return Scheme (again delayed) should be made, and the frankly ridiculous decision to scrap Air Passenger Duty (APD) for short haul domestic flights (the most polluting of all air travel) should be immediately reversed.

Economic Crime

AAT was invited to join a working group set up by Tax Justice UK to consider issues around sanctions and economic crime in light of legislation being rushed through Parliament in response to the Ukraine crisis.

The new Economic Crime Act came into effect in March and was welcomed by AAT as a step in the right direction but a missed opportunity to take more meaningful action. This is explained in further detail in our AAT Comment article on the subject.

The Economic Secretary to the Treasury, John Glen MP, also wrote to all tax and accountancy professional bodies, including AAT, trumpeting the new legislation and reminding us that in order for these new sanctions to have the intended impact, UK accountancy, legal and other relevant firms need to understand and comply with their obligations in respect of sanctions regulations.

Phil also attended an All Party Parliamentary Group (APPG) meeting on the subject where there was broad agreement that more government action was needed.

Parliamentary engagement

Engagement with 17 Parliamentarians took place in March, relating to a range of issues including the Spring Statement and our Time for Change report. 

This took Phil’s Parliamentary engagement with members of the House of Commons and House of Lords to 132 for the 2021-2022 financial year – ensuring AAT members interests are protected and promoted at the heart of government.

Non-Parliamentary engagement

Engagement with over 60 external stakeholders took place in March 2022.

These included other professional bodies such as the ICB and ACCA, civil servants at HMRC and BEIS and organisations from TaxWatch to Xero.

In total, Phil engaged with 645 individuals and organisations on behalf of AAT within the 2021-2022 financial year.

AAT consultations, calls for evidence & inquiry responses

There were no new consultation responses submitted in March but over 40 were submitted in total during the 2021-2022 financial year.

Most of AAT’s submissions are available on the AAT Policy page.

Other meetings and engagements

• Phil met with various members of the Office for Tax Simplication (OTS) to discuss AAT members ideas for tax simplification.
• Phil participated in the regular HMRC Virtual Communications Group (VCG).
• Phil represented AAT at the regular Trade Association Forum hosted by the Federation of Small Businesses.
• Phil represented AAT members at the CBI Business Rates Working Group.
• Adam Harper attended the regular Representative Bodies Steering Group (RBSG) with HMRC.

If you would like more information about any of the above, public affairs activities in general, previous copies of the monthly round-up or think I might be able to help your work in any way, please don’t hesitate to get in touch. Keep up to date with AAT’s Public Affairs activities on Twitter at: @PhilHall2021