PBR

The pre budget report will be given on Tuesday, 9 October, at 3.45pm. A date dictated by the election that never was.

An annual event, usually tucked away in the pre-holiday season, and previously a good time to get away with the announcement of controversial legislation (e.g., the revisions to sections 43 and 739, in 2002 and 2005 respectively), the report will receive far more attention than usual. One wonders over what beckons this time around and whether the Chancellor had the foresight to prepare two reports; one for if the economy is about to go belly up with a get-in-quick election, and the other for if the economy is about to go belly-up and his predecessor forgets where he left his balls. In any event, the new Chancellor must be thinking that his three month tenure has been one hospital pass after another, with the only plus being that he did not inherit Dawn Primarolo as his number two.

Hopefully, we will now get to read most, if not all, of the remainder of the proposed new capital allowances code to take effect from next April and, doubtless, there will be the now obligatory announcements about green taxes etc., which will go unread as usual. But what else ?

With the removal of an imminent election, it will be interesting to see, what if any, of the so-called fairness issues will receive attention; private equity, the remittance basis (or, as it apparently now known, the domicile rule), and a reversal of Arctic ?

Our guess is that a response to the media rounding on the private equity sector, and its benefiting from business asset taper relief for its income profits, will, at most, be said to subject to consultation and, more likely, get no attention whatsoever. This should, at least, have the welcome by-product of avoiding yet more taper relief rules for the SME sector.

The same inaction probably also goes for the remittance basis; with the tradition of perpetual consultation being continued. After all, the Chancellor is a lawyer and will be familiar with the attractions of stasis and certainty in the law and, politically, it looks as though his boss is now less inclined than ever to take the economic risk that foreign money will flee the UK (not to mention the Labour Party coffers).

It will, however, be interesting to see whether the opportunity will be taken to announce the threatened amendments to the settlement rules. We could be sure there would be no change announced in the face of an election but, with an election not now expected until 2009 or 2010, this will presumably be as good a time as any, politically speaking, for a change to be introduced which will adversely affect the middle England vote and those hard working families of which politicians, of all stripes, are so keen on. If so, it will be noteworthy to see the quality of the new legislation. If properly thought through, intelligible and workable, this will support the suspicions that the government has been working on draft legislation for five years, or more, but chose, instead, to sidestep the political damage of enacting legislation in favour of having the Revenue pursue Arctic in the courts in the hope that the judiciary could be blamed as the bad guys who picked on those hard working families.