Tax consultations: Never a dull moment

Tax consultations
Donald Drysdale By Donald Drysdale for ICAS

23 November 2015

In this update, Donald Drysdale provides a glimpse of some of the tax consultations in which ICAS has participated so far this year.

The consultation process

For the tax team at ICAS, the sun never sets on consultations.  The views we offer are not always implemented, but on many occasions our voice makes an important difference to the development of tax policy.

This year has been highly charged politically.  We have a new majority Conservative government at Westminster, where there’s also an exceptionally strong Scottish National Party presence.  Accompanying these political changes, many new tax proposals have been brought forward.

Among a mass of noteworthy tax consultations, many have involved close working with other technical policy channels in ICAS.  Inevitably, some have included confidential soundings by HMRC or Treasury that can’t be shared beyond members of particular ICAS committees.

But most are public consultations to which ICAS has responded publicly.  Such consultation responses are posted on icas.com and make valuable reading for members and students, whether in practice or in business. They provide insight into existing tax rules, advance warning of possible changes, and – importantly – genuine opportunities to influence future tax policy.

Tax avoidance and evasion

A relentless theme is Treasury and HMRC’s continuing drive to eradicate tax evasion and address the more aggressive types of tax avoidance.  Our response on strengthening sanctions for tax avoidance covered new measures against serial tax avoiders and penalties for arrangements caught by the general anti-abuse rule (GAAR).

We’ve responded to HMRC on proposals for civil and criminal options to tackle offshore tax evasion, and expressed concerns about some of the practicalities involved in applying new criminal sanctions, including the new strict liability criminal offence of failing to declare offshore income and gains.  And we’ve submitted views on an extension of HMRC’s data-gathering powers.

We welcomed HMRC’s review of penalties and commented on their suggested new approach.  And with an eye to resolving disputes, we expressed our concerns about proposed Court and Tribunal fees.

Business taxes

Consultations on business topics have ranged from improving large business tax compliance to making R&D tax reliefs more accessible to small companies. Other topics that tend to be of particular interest to smaller businesses include a possible reform of the ‘IR35’ intermediaries legislation, new tax relief for replacing furnishings in let residential dwellings, and an extension of the averaging period for farmers.

For businesses operating overseas we’ve made representations on deductible VAT relating to foreign branches.  Also on VAT, we’ve advised that the UK VAT regime acts as a disincentive to implement new and innovative service delivery models across the public sector.

Employment taxes

The government has reviewed the tax treatment of employees’ benefits and expenses, and also considered these separately in the context of employment intermediaries.  On a more specialised topic, they’ve consulted on the tax treatment of income from sporting testimonials. ICAS has responded to all these.

Personal taxes

Of reforms considered, some such as the deduction of income tax from savings income affect the many while others, such as reforms to the tax treatment of non-domiciled individuals, affect the few.  We also submitted our views on proposals to simplify the tax and national insurance treatment of termination payments.

Devolution

It’s no surprise that a quarter of this year’s consultations relate to aspects of UK devolution.

Following Westminster’s Command Paper ‘Scotland in the UK: an enduring settlement’, the subsequent ICAS evidence to the Scottish Parliament on implementing the report of the Smith Commission addressed key elements now contained in the Scotland Bill currently before the House of Lords.

We’ve submitted representations on the design of a Scottish fiscal framework, Revenue Scotland’s ‘Charter of Standards and Values’, and the setting up of the Scottish Fiscal Commission.  ICAS also commented on proposals for a Lobbying Transparency Bill to regulate those lobbying the Scottish Parliament, and submitted evidence to the Independent Commission for Competitive and Fair Taxation in Scotland.

The Scottish rate of income tax (SRIT) will be implemented on 6 April.  The proposed rate is expected to be announced in the draft Scottish Budget on 16 December. Exchanges with the Scottish Parliament and HMRC have concentrated on (somewhat belatedly) how to raise public awareness of SRIT and on developing guidance on the definition of a Scottish taxpayer.

Land and Buildings Transaction Tax (LBTT) was introduced in Scotland on 1 April with some loose ends unresolved, and there’s been consultation since on LBTT rules for property authorised investment funds. Work has also arisen in connection with the new Scottish Tribunals, and ICAS has submitted evidence to the Scottish Commission on Local Tax Reform.

UK-wide devolution has become a topic of growing interest.  Charlotte Barbour, Director of Taxation at ICAS, gave evidence to the House of Lords Select Committee on Economic Affairs on the devolution of public finance in the UK. Any devolution has knock-on effects, and we responded to a Treasury paper considering options for supporting English regional airports from the impacts of devolving Air Passenger Duty.

Your chance to make a difference

While we await the Autumn Statement on 25 November and publication of Finance Bill 2016 draft clauses on 9 December, consultations are still going on.  Current topics include forthcoming changes to the Patent Box regime, the tax deductibility of corporate interest expense, plans to withdraw certain extra-statutory concessions, and the EC’s re-launched proposals on the Common Consolidated Corporate Tax Base (CCCTB).

The more your views, concerns and suggestions are shared with us, the better placed we’ll be to influence governments and other authorities. All readers are invited to submit views on current and future tax-related consultations by e-mail to tax@icas.com

Article supplied by Taxing Words Ltd

Topics

  • Consultations and responses
  • Tax

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