Thread by @DanNeidle

My tweet below was unfair to Boris Johnson. It turns out the abolition of industrial buildings allowance *was* driven by EU law considerations, although this wasn't widely known at the time (and I only found out yesterday).

The background is interesting #taxnerdery

Because IBAs favoured a particular sector (industry), it was believed they constituted State aid. But because IBAs were introduced before 1973, they were grandfathered and so exempt from the rules.

In the 90s and 2000s, bad people started using IBAs to drive tax avoidance schemes (think - like the film partnerships but using industrial buildings). So HMT/HMRC needed to change the law. But that would lose the 1973 grandfathering.

State aid clearance would have to be applied for, and the view was that it wouldn't be granted. So the response was to abolish IBAs and present it as a "simplification", rather than admit they were forced into it by EU law.

HMRC/HMT has lots of form with this approach - which we can generously call "spin". The CFC reforms, dividend exemption, abolition of ACT etc - all driven by EU law, but all spun as business-friendly simplification. What I hadn't realised was that IBAs belong on the list.

Does that make Johnson right? You could still permit expensing of capital for *everything*, but probably not reintroduce IBAs. Is that what he meant? I don't know, but it's not fair for me to assume he was wrong, and I'll delete my tweet shortly.

Thanks to some old-timers for pointing me in the right direction. And apologies to Boris Johnson and @Stephen_Herring (who basically made this point and I ignored him).