U.K. Government Vows to Limit Retrospective Tax Legislation

The British government pledged to limit retrospective tax legislation to “wholly exceptional circumstances” as it replied to a parliamentary report on the March budget.

The comments, published by the cross-party House of Commons Treasury Committee in London today, came in response to concerns raised by lawmakers after Chancellor of the Exchequer George Osborne vowed to act “swiftly, without notice and retrospectively” if wealthy homebuyers found “inappropriate” ways around a crackdown on stamp-duty avoidance.

“The government agrees that changes to tax legislation, where the change is to have effect from a date earlier than the date of announcement, should be restricted to wholly exceptional circumstances,” the government said.

The commitment was welcomed by Treasury Committee Chairman Andrew Tyrie, a lawmaker from Osborne’s Conservative Party.

“Retrospection conflicts with the principles that should underpin tax policy as recommended by this committee and as laid down by the chancellor,” Tyrie said in an e-mailed statement. “It would also undermine the reputation of the U.K. as a high- quality place to do business.”

Tyrie attacked the government for arguing that it has become harder to prevent elements of the annual budget being leaked because Britain has a coalition government, meaning many more people see it in advance.

“Coalition government is no excuse for selective leaking,” he said.

The government denied that media reports of changes to tax rates and allowances in the week before the March 21 budget were the result of briefings by Treasury officials, Treasury ministers or special advisers at the department.

To contact the reporter on this story: Andrew Atkinson at a.atkinson@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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