Scope of Finance Bills
36.39The long title of a Finance Bill normally describes it as a bill ‘to grant certain duties, to alter other duties, and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with finance’. These words must be interpreted in the light of the functions of the former Committee of Ways and Means, on the resolutions of which Finance Bills were formerly founded. Although the Committee itself was abolished in 1967, its traditional terms of reference, ‘to consider of the Ways and Means for raising the supply to be granted to Her Majesty’, continue to determine the proper scope of a Finance Bill.
Thus, the public revenue and finance referred to in the long title is that of the central government only, and does not include the financing of other bodies within the public sector, such as local authorities; and the expenditure for which the revenue is to be raised is central government expenditure as a whole, rather than particular items or purposes of expenditure. A provision to authorise borrowing or the imposition of a charge for a specified expenditure purpose would, therefore, be outside the scope of a Finance Bill.
The scope of a Finance Bill is not limited to the imposition and alteration of taxes for the purpose of adjusting the revenue of a particular year. It is not intended to be an annual Act in the same sense as the Appropriation Act, but normally includes many provisions of a permanent character for the regulation of fiscal machinery and other purposes. But, although the taxation it imposes may extend beyond the immediate financial year, a Finance Bill is regarded as exceeding its proper scope if it imposes a tax which is not to be charged until after the close of the current financial year. The same restriction applies to any taxation change which is not to take effect until a future financial year, including reliefs and changes in tax machinery or administration.1
To avoid this limitation on the scope of Finance Bills, provisions are frequently included in founding resolutions which expressly authorise the inclusion of the proposals in the bill ‘notwithstanding anything to the contrary in the practice of the House’.2 Such provisions are usually included among the resolutions on which the bill is founded, but may be introduced at a later stage.3
Provisions not essentially connected with national finance, or not incidental to the taxing or administrative provisions of a Finance Bill, are outside the scope of a Finance Bill, and their inclusion might justify an accusation of ‘tacking’ (see para 37.17 ). From time to time, however, resolutions are passed, similarly beginning with the words ‘notwithstanding anything to the contrary in the practice of the House’, to authorise the inclusion in the bill of provisions which, while not falling within the strict definition of matters appropriate to a Finance Bill, are nevertheless sufficiently closely related to those matters to justify inclusion. Examples of provisions which have been authorised by procedure resolutions of this kind in recent years are:
- general provisions with respect to the finances of government trading funds;4
- provisions relating to National Loans Fund interest and loans;5
- provision about security for excise duties charged in other EU Member States;6
- provisions for the mutual exchange with other governments of information necessary for carrying out laws concerning direct taxes;7
- provision for allowing tax credits to be paid to companies in respect of research and development expenditure relating to vaccines or medicines8 or of expenditure on film making activities;9
- provision for the extension of relief for makers of television programmes to new types of programming;10
- provision requiring manufacturers of tobacco products not to facilitate smuggling,11 and provision for a registration scheme for raw tobacco;12
- provision for first-year tax credits to be paid in connection with first-year qualifying expenditure under the Capital Allowances Act 2001;13
- certain provisions in connection with anti-avoidance, including a single anti-avoidance regime covering social security contributions as well as taxes14 and measures relating to country-by-country reporting and publication of tax strategies by certain companies.15
By practice, such resolutions are not permitted in respect of matters which are so far removed from central finance as to make their inclusion in the Finance Bill indefensible.
- However, an amendment to postpone a proposed change in tax machinery from the immediate financial year to the subsequent one has been ruled to be in order, HC Deb (1995–96) 270, c 506 ff.
- For example, Votes and Proceedings, 1 November 2018, resolutions 6, 15, 18, 34 and 62. It was formerly the practice to make such provision in a separate resolution: see Erskine May (24th edn, 2011), p 781.
- For example, CJ (1984–85) 549.
- Finance Act 1991, s 119; CJ (1990–91) 296; Finance Act 1993, s 210; CJ (1992–93) 518; Finance Act 2001, s 108; CJ (2000–01) 216.
- Finance Act 1983, ss 44 and 45; CJ (1982–83) 265; Finance (No 2) Act 1992, s 80; CJ (1992–93) 41.
- Finance Act 2000, s 27; CJ (1999–2000) 280.
- Finance Act 2000, ss 146 and 147; CJ (1999–2000) 280.
- Finance Act 2002, s 54; CJ (2001–02) 505.
- Finance Act 2006, s 38; CJ (2005–06) 550.
- Finance Act 2015, ss 30 and 31; Votes and Proceedings, 23 March 2015.
- Finance Act 2006, s 2; CJ (2005–06) 549.
- Finance Act 2016, s 179; Votes and Proceedings, 22 March 2016.
- Finance Act 2008, sch 25; CJ (2007–08) 289.
- Finance Act 2016, s 161 and sch 18; Votes and Proceedings, 22 March 2016.
- Finance Act 2015, s 122; Votes and Proceedings, 23 March 2015; Finance Act 2016, s 161 and sch 19; Votes and Proceedings, 22 March 2016.