Tax: How do you keep up to date?

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By Donald Drysdale for ICAS

8 April 2019

Given that tax never stands still, Donald Drysdale suggests that the offer of a free update from ICAS on key tax issues affecting businesses and practices should not be ignored.

Conduct in relation to tax

Have you looked recently at the guidelines on Professional Conduct in Relation to Taxation (PCRT)?

They set out the fundamental principles and the standards for tax planning, with which all ICAS members and others working in tax are required to comply. From 1 March the document has been revised to ease navigation.

In its new, shortened form, PCRT is supported by five supplementary help sheets dealing with: (A) Submission of tax information and ‘tax filings’; (B) Tax Advice; (C) Dealing with errors; (D) Request for data by HMRC; and (E) Members’ Personal Tax Affairs.

The help sheets, while not mandatory, represent guidance designed to help members apply the fundamental principles and standards in their tax work. In a disciplinary case, a member may be asked to explain any failure to follow the help sheet guidance.

Keeping up to date is crucial

PCRT obliges each member to maintain professional knowledge and skill at the level required to ensure that their client or employer receives competent professional service based on current developments in practice, legislation and techniques, and to act diligently and in accordance with applicable technical and professional standards.

HMRC regard PCRT as an acceptable basis for dealings with them and they expect it to be honoured. They have also incorporated PCRT into their own Standards for Tax Agents published on 4 January 2018, and they may take shortcomings in its observance into account in assessing the severity of any failures in tax compliance. PCRT is therefore the yardstick against which all tax agents and advisers, whether qualified or not, may be judged.

For practising firms and in-house tax departments, this raises risk management issues. For example, how can one ensure that all personnel comply with PCRT? This may not be easy, but could be fundamental in protecting the reputation and ongoing viability of the organisation.

Tax changes are ubiquitous, and maintaining your knowledge and that of your staff is essential. Training opportunities come in a wide variety of different guises. For you and your team, free Spring Tax Updates from ICAS may be invaluable.

Current developments

Philip Hammond’s Spring Statement on 13 March brought little drama. There had been speculation about whether it would turn into an emergency Budget to cope with some of the repercussions of Brexit, but this hasn’t happened. At least, not yet.

I say “not yet” because Brexit surprises may still emerge, and Hammond might be forced to take unexpected action to balance the UK’s books. And incidentally, that could create unwelcome repercussions for the devolved administrations in Scotland and Wales.

Whatever transpires, 2019 is already a year of major tax changes. Businesses and their agents must cope with the implementation of Making Tax Digital (MTD) for VAT. Thankfully, MTD will not be mandated for any other taxes in 2020 – suggesting that MTD for income tax may proceed on a voluntary basis.

If you work with taxpayers who rely on the availability of capital gains tax entrepreneurs’ relief, are you aware that the rules for this relief changed on 29 October 2018 and again on 6 April 2019? Pre-existing advice ought to be refreshed.

Draft secondary legislation for capital allowances on new non-residential structures and buildings was published recently. These will apply to eligible costs incurred on or after 29 October 2018, subject to the commencement provisions.

Businesses will have to prepare for the extension of IR35 in the private sector. This will mean new ways of working for many off-payroll workers and those engaging them – although not until April 2020.

Consultations are afoot. Changes are expected to the final exemption period for capital gains tax private residence relief and the related lettings relief. National insurance contributions (NICs) employment allowance is to be restricted to businesses with employer NICs below £100,000 a year.

The Government is consulting on the effectiveness of social investment tax relief (SITR), HMRC’s approach to enterprise investment scheme (EIS) approved funds, and the maturing of child trust funds (CTFs).

HMRC are also going to be calling for evidence on potential simplification and improvement of the VAT partial exemption regime and the capital goods scheme, to ensure they are as simple and efficient for taxpayers as possible.

HM Treasury has published a discussion paper on aggregates levy, reviewing the structure and current operation of the levy. Devolution of the levy in Scotland is still planned.

Other developments of particular interest to companies are the new digital services tax (DST) starting in April 2020, new rules on offshore receipts in respect of intangible property and technical changes to the hybrid and other mismatch rules, and HMRC’s response to the consultation on corporate capital losses.

Further developments are in the wind: technical changes to the general anti-abuse rule (GAAR); a review of the loan charge has just been published; and HMRC are to become a preferred creditor for certain tax debts in an insolvency.

ICAS Spring Tax Updates

As usual, the ICAS tax team is presenting a series of Spring Tax Updates in the following centres on the dates shown, and places can be booked through the links below. Attendance is free-of-charge except in Galashiels, where a nominal charge applies.

These events offer ICAS members, students and non-members an overview on key tax issues affecting businesses and practices. They are led by Charlotte Barbour, ICAS Director of Tax; Susan Cattell, ICAS Head of Tax Technical Policy; and Philip McNeill, ICAS Head of Tax (Tax Practice and Owner Managed Business Taxes).

These annual updates are always well received and well attended. This year ICAS also invites you to act as a mentor, bringing along a less experienced professional to help generate topical, cutting-edge conversation with a younger audience. The aim is to introduce the next generation to the world of networking at these ICAS events.

Article supplied by Taxing Words Ltd