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HMRC internal manual

Oils Technical Manual

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HM Revenue & Customs
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Law - background: How does existing UK law get changed?

Introduction

If a need to change the law is identified and it has been agreed that the policy should be changed, the Oils Team (Policy) will first explore whether the use of existing legislation will allow us to do this, for example the RDCO scheme which required all dealers who handled a ‘controlled oil’ to register. Although this was a new scheme and it imposed a new set of conditions on traders and others who had never had to meet these legal requirements before, it was introduced in 2003 using Section 100G of the Customs and Excise Management Act 1979.

If it is not possible to use existing law, we would then consider if we already have the power to make secondary legislation under powers granted to us under existing primary legislation. If not we would then have to draft new primary legislation, which can be a long and complex process normally requiring Finance Bill space and therefore subject to the Budget process timetable.

The Finance Act

In order to avoid the need to continuously revise and to update much of our primary legislation, this is often amended instead in the annual Finance Act (FA), which is brought in as part of the normal budget process. The FA may also be used, when subsequent Regulations modernise or change fundamental issues contained in legislation, and the primary legislation can be modified more simply through the FA.

A Finance Act is passed each year because Income Tax and Corporation Tax are annual taxes that have to be continually re-imposed. The FA has its origins in the Chancellor of the Exchequer’s Budget speech, or the autumn pre-Budget Report or Autumn Statement, in which proposed changes to taxation are set out. The proposals are debated in the House of Commons, and budget resolutions passed. The FA is also used to amend or to vary the existing excise duty rates.

The Finance Bill is published shortly after the budget speech, and sets out in detail, the new tax proposals. The Bill is debated in Parliament and may be amended during its passage through the House. It finally receives Royal Assent and is thereafter known as the Finance Act for the year in which the assent was given.