Annex 1: Minor changes in the law Change 64: Procedure for making orders and regulations: section 1171
This change concerns the procedure for making regulations in connection with the construction industry scheme in Chapter 3 of Part 3 of FA 2004. In accordance with section 73A of FA 2004 the Treasury may by order designate an international organisation to be exempt from the obligation, as a contractor, to deduct tax from payments to sub-contractors.
There are three main parliamentary procedures for making orders, depending on the degree of scrutiny thought appropriate.
	No scrutiny: Sometimes Parliament may decide that it does not need any control over the exercise of a power.
	Negative resolution procedure: The order can become law without adebate or vote inParliament. It can beopposed and may be rejected but not amended.
	Affirmative resolution procedure: The order is subject to affirmativeresolution. It cannotcome into effect until bothHouses have approved adraft statutory instrument in a vote.
Most tax regulations are made under the negative resolution procedure. That is the general rule in:
	section 828 of ICTA;
	section 570B of CAA;
	section 717 of ITEPA;
	section 873 of ITTOIA; and
	section 1014 of ITA.
But there are exceptions in each Act for regulations that are routinely administrative, for which no Parliamentary scrutiny is considered necessary.
The power to designate an international organisation for the purpose of the construction industry scheme was in section 582A(1) of ICTA (applied by subsection (6) of that section). That power was excepted from the negative resolution procedure in section 828(3) of ICTA by subsection (4) of that section. So the power fell within the “no scrutiny” procedure.
ITA rewrote most of the rules about international organisations in section 979 of ITA. But that section does not apply to the construction industry scheme. Instead, ITA inserted section 73A of FA 2004. That section is an exception to the general rule in section 1014(4) of ITA that orders or regulations are to be made under the negative resolution procedure (see subsection (5)(a) of that section). So the power iswithin the “no scrutiny” procedure.
The difficulty is that the ITA rules apply only to powers “under the Income Tax Acts”. The deduction under section 61 of FA 2004 is “a sum equal to the relevant percentage of … the payment”. On the face of it, that sum is neither income tax nor corporation tax, although it may be treated as either by section 62(2) or (3)(c) of FA 2004.
It is possible that, to the extent that section 61 of FA 2004 is part of the Corporation Tax Acts, there is no exception to the general rule in section 828(3) of ICTA that a power such as that in section 73A of FA 2004 is to be exercised by an instrument subject to the negative resolution procedure.
This change excludes the order-making power under section 73A of FA 2004 from the negative resolution procedure required under subsection (4) of section 1171. The effect of the change is to restore the position to what it was before ITA and bring the income tax and corporation tax rules back into line.
This change has no implications for the amount of tax due, who pays it or when. It affects (in principle and in practice) only administrative matters.